12 15 Use the following information for questions 10 and 11 Your firm managed to get a government contract to supply the City of Atlanta with 26,000 tons of steel annually for infrastructure development. You have estimated that your firm will need an initial $4,500,000 investment in the new machinery to get started; the project will last for five years. The annual fixed costs will be $515,000, and that variable costs should be $295 per ton: accounting will depreciate the initial asset investment straight-line to zero over the 5-year project life. At the end of five years, the equipment will be dismantled, and the estimated selling price of the equipment is $275,000 after dismantling costs. The City of Atlanta will pay your firm a selling price of $385 per ton. The project will increase the firm's working capital needs by $400,000, recovered when the project is terminated. Your firm's capital cost is 15%, and the marginal tax rate is 24%. Suppose you are confident about your own projections, but you are a little unsure about City of Atlanta's actual steel requirements. What is the sensitivity of the project's NPV to changes in the quantity supplied? 18 21 24 $189.41 per ton sold