You are considering a new product launch. The project will cost $950,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 180 units per year; price per unit will be $18,500, variable cost per unit will be $14,000, and fixed costs will be $185,000 per year. The required return on the project is 15 percent, and the relevant corporate tax is 35%. a. Based on your experience, you think the unit sales, variable cost, and fixed cost projections given projections are probably accurate to within +10 percent. What are the upper and lower bounds for these projections? What is the base-case NPV? What are the best-case and worst-case scenarios? (Hint: consider your changes to cost and revenue corresponding to each case, e.g. best or worst) b. If the probability of base-case scenario is 50 percent, the best-case scenario is 25%, the worst-case scenario is 25%, What is the project's expected NPV, standard deviation, and its coefficient of variance of.

Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2,350,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,830,000 in annual sales, with costs of $1,850,000. Assume the tax rate is 25 percent and the required return on the project is 11 percent. What is the project’s NPV?

Wilson, Inc., is considering a new four-year expansion project that requires an initial fixed asset investment of $1,875,000. The fixed asset will be depreciated straight-line to zero over its four-year tax life, after which time it will be worthless. The project is estimated to generate $2,040,000 in annual sales, with costs of $1,235,000. If the tax rate is 35 %, and the required return on the project is 12%, what is the project's NPV?

Nikul

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Your firm is considering investing in a new capital project that requires an initial investment of $8,000,000. This equipment will be depreciated by the straight-line over four years down to a value of zero. The machinery also has an operation life of four years. At the end of that life, you estimate it will have a salvage value of $120,000. Any gain or loss on the resell will be taxed at the firm's marginal tax rate. During the four-year life, the project should generate annual cash flows of $225,000 per year. The firm has a marginal tax rate of 22%, and it requires a return of 8.50% on projects of such risk. What is the Net Present Value of this project?

You are considering a new product launch. The project will cost $960,000, have a 5-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 350 units per year; price per unit will be $15,955, variable cost per unit will be $12,000, and fixed costs will be $625,000 per year. The required return on the project is 10 percent, and the relevant tax rate is 23 percent. Based on your experience, you think the unit sales, variable cost, and fixed cost projections given here are probably accurate to within +10 percent. a. What are the best-case and worst-case NPVs with these projections? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b. What is the base-case NPV? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What is the sensitivity of your base-case NPV to changes in fixed costs? Note: A…

Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.1 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,150,000 in annual sales, with costs of $1,311,236. Required: If the tax rate is 35 percent, what is the OCF for this project? (Do not include the dollar sign ($). Enter your answer in dollars(e.g., 1,234,567), not millions of dollars.)

A corporation is considering purchasing a machine that will save $150,000 per year before taxes. The cost of operating the machine (including maintenance) is $30,000 per year. The machine will be needed for five years, after which it will have a zero salvage value. MACRS depreciation will be used, assuming a three-year class life. The marginal income tax rate is 25%. If the firm wants 15% return on investment after taxes, how much can it afford to pay for this machine? Click the icon to view the MACRS depreciation schedules Click the icon to view the interest factors for discrete compounding when /- 15% per year. If the firm wants 15% return on investment after taxes, it can afford to pay thousand for this machine. (Round to one decimal place.)

Concose Park Department is considering a new capital investment. The cost of the machine is​ $280,000. The annual cost savings if the new machine is acquired will be​ $165,000. The machine will have a 3−year life and the terminal disposal value is expected to be​ $35,000. There are no tax consequences related to this decision. If Concose Park Department has a required rate of return of​ 14%, which of the following is closest to the present value of the​ project?