Problem:
We are evaluating a project that costs $841,000, has a 9-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 105,000 units per year. Price per unit is $40, variable cost per unit is $29, and fixed costs are $848,569 per year. The tax rate is 36 percent, and we require a 14 percent return on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/-11 percent.
Required:
Question: Calculate the best-case and worst-case NPV figures
Note: Explain all steps comprehensively.