The most likely outcomes for a particular project are estimated as follows:
Unit Price: $50 Variable Cost: $30
Fixed Cost: $300,000 Expected Sales: 30,000 units/year
However, you recognize that some of these estimates are subject to error. Suppose that each variable may turn out to be either 10% higher or 10 lower than the original estimate. The project will last for 10 years and requires an initial investment of $1 million, which will be depreciated straight-line over the project life to a final value of zero. The firm's tax rate is 35%, and the required rate of return is 12%.
a) What is the project's NPV in the most likely scenario?