Problem:
You are considering a new product launch. The project will cost $1,400,000, have a four-year life, and have a salvage value of zero. The product falls into the three-year MACRS class. Sales are projected at 190 units per year; price per unit will be $21,000, variable costs per unit will be $15,000, and fixed costs will be $225,000 per year. The required return of the project is 15 percent, and the relevant marginal tax rate is 35 percent.
Required:
Question 1: What is the base-case NPV?
Question 2: What are the best-case and worse case scenarios?
Note: Please show guided help with steps and answer.