Suppose a firm is considering the following project, where all of the dollar figures are in thousands of dollars. In year 0, the project requires $11,350 investment in plant and equipment, is depreciated using the straight-line method over seven years, and has a salvage value of $1,400 in year 7. The project is forecast to generate sales of 2,100 units in year 1 and grow at a sales growth rate of 55.0% in year 2. The sales growth rate is forecast to decline by 15.0% in years 3 and 4, to decline by 20.0% in year 5, to decline by 25.0% in year 6, and to decline by 30.0% in year 7. Unit sales will drop to zero in year 8. The inflation rate is forecast to be 2.0% in year 1, rising to 4.0% in year 5, and then leveling off. The real cost of capital is forecast to be 11.0% in year 1, rising to 12.2% in year 5, and then leveling off. The tax rate is forecast to be a constant 35.0%.

Sales revenue per unit is forecast to be $9.70 in year 1 and then to grow with inflation. Variable cost per unit is forecast to be $7.40 in year 1 and then to grow with inflation. Cash fixed costs are forecast to be $5,280 in year 1 and then to grow with inflation. What is the project NPV? What is the NPV Break-Even Point in Year 1 Unit Sales, where NPV equals zero? What is the NPV Break-

Even Point in the Year 2 Sales Growth Rate, where NPV equals zero? What is the NPV Break-Even Contour in the two-dimensional space of Year 1 Unit Sales and Year 2 Sales Growth Rate?