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Question: delia landscaping is considering a new 4year project the equipment...

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Delia Landscaping is considering a new 4-year project. The equipment necessary would cost $173,000 and be depreciated on a 3-year MACRS to a book value of zero. The MACRS percentages each year are 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. At the end of the project, the equipment can be sold for 10 percent of its initial cost. The project will have annual sales of $110,000, variable costs of $27,700, and fixed costs of $12,300. The project will also require net working capital of $2,900 that will be returned at the end of the project. The company has a tax rate of 40 percent and the project's required return is 12 percent.   

1. What is the NPV of this project? What is the project's IRR? (5 points/question)  

2. You feel that both sales and fixed costs are accurate to +/-5 percent. What are the NPVs of this project for both the best and the worst-case scenarios? (15 Points)                                              

"3. How sensitive is the NPV to changes in the sales? How sensitive is the NPV to changes in the fixed cost? (15 points)
sold?"                                                                                                                                      

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