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

question 61

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 $\pm$ 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

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Definitions:

Expressed Emotion

A measure of the family environment that is based on how much criticism, hostility, and emotional over-involvement are directed towards the patient by family members.

Mood Disorders

A category of mental health disorders characterized by significant changes or disturbances in mood, such as depression and bipolar disorder.

Relationship Dissolution

The process of ending a personal relationship, which can involve emotional, physical, and psychological adjustments and challenges.

Interpersonal Problems

Issues that arise in the context of social relationships, often involving communication difficulties, conflicts, or emotional disruptions.