Amador Ltd is considering investing $\$ 120,000$ in equipment that has a life of 15 years. Its final scrap value is $\$ 25,000$.

The equipment will be used to produce 15,000 deluxe pairs of rugby boots per annum, generating a contribution of $\$ 2.75$ per pair. Specific fixed costs are estimated at $\$ 18,000$ per annum. The firm has a $15 \%$ cost of capital.

Required:

(a) Calculate the NPV of the project.

(b) Calculate the sensitivity of your NPV to the:

(i) initial investment

(ii) annual contribution

(iii) annual fixed costs.

(c) Identify the minimum annual sales required to ensure that the project at least breaks even.