We are evaluating a project that costs $734,000, has an eight-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 109,000 units per year. Price per unit is $44, variable cost per unit is $26, and fixed costs are $742,808 per year. The tax rate is 37 percent, and we require a 18 percent return on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 18 percent.
Required:
(a) Calculate the best-case NPV.
(b) Calculate the worst-case NPV.