We Are Evaluating a Project That Costs $854,000,has a 15-Year

Multiple Choice

We are evaluating a project that costs $854,000,has a 15-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 154,000 units per year.Price per unit is $41,variable cost per unit is $20,and fixed costs are $865,102 per year.The tax rate is 33 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 ±14 percent.What is the worst-case NPV?

A) $984,613
B) $1,267,008
C) $1,489,511
D) $1,782,409
E) $1,993,870