Managers at Massive Dynamics are evaluating a new industrial…
Managers at Massive Dynamics are evaluating a new industrial product. The product will sell at $ per unit for the next three years. The fixed cost and depreciation will be $,000 and $,000 per year, respectively, and variable costs will be $ per unit. The production will not affect the firm’s net working capital, but will require an initial investment of $,000 in fixed assets. The fixed assets will have an after-tax salvage value of $,000 after three years. The managers, though, are not confident about their forecast of the quantity they will sell per year. They expect to sell ,000 units per year, but this forecast is only accurate within ±25 percent. If Massive Dynamics’ tax rate is 21 percent and they require a return of percent for new industrial products, what is the worst-case NPV? (Enter your answer rounded to the nearest $0.01)