Problem:
We are evaluating a project that costs $1,582,000, has a seven-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 87,100 units per year. Price per unit is $34.30, variable cost per unit is $20.55, and fixed costs are $751,000 per year. The tax rate is 30 percent, and we require a return of 12 percent on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±10 percent.
Required:
Question: Calculate the best-case and worst-case NPV figures?
Note: Please provide step by step solution.