Homework answers / question archive / Green Gardens is analyzing a proposed 5-year project that requires an investment of $77, 000 in fixed assets and $17,400 in net working capital

Green Gardens is analyzing a proposed 5-year project that requires an investment of $77, 000 in fixed assets and $17,400 in net working capital

Finance

Share With

Green Gardens is analyzing a proposed 5-year project that requires an investment of $77, 000 in fixed assets and $17,400 in net working capital. The company uses straight-line depreciation over a project's life. Sales are estimated at 24,000 units ±3 percent. The expected variable cost per unit is $17, and the expected fixed costs are $39,000. The fixed and variable cost estimates are considered accurate within a range of ±2 percent. The sales price is estimated at $36 a unit, ±1 percent. The discount rate is 16 percent, and the tax rate is 35 percent. What is the net income under the pessimistic case scenario?