Problem
We are evaluating a project that costs $1,140,000, has a ten-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 54,000 units per year. Price per unit is $50, variable cost per unit is $20 and fixed costs are $TEDDOD per year. The tax rate is 35 percent, and we require a return of 18 percent on this project. Suppose the projections given for price, quantity, variable costs and fixed costs are all accurate to within 10 percent. Calculate the pest-case and worst-case NPU figures.