A company is starting up a new operation. It will cost $4,000,000 to purchase the land and equipment for this project. The project itsself will last 5 years and the startup costs will be depreciated straight line to zero over the project's life. The land and equipment will be sold for 900,000 at the end of the project.

There will be an additional investment of 50,000 in net working capital. The company believes that the project will produce 40,000 tons of diamond per year and that the price of the diamond will remain at $55 per ton througout the project. 8.00 per ton will be the variable costs and fixed costs will be 500,000 each year for the project. The tax rate is 30% and required return is 14%. no other costs remain.

The company believes its estimate that the project will produce 40,000 tons per year is onlu accurate to within plus or minus 15%. Everything else is accurate.

What is the NPV of project's base case scenario?

What is the NPV of project's worse case scenario?

What is the NPV of project's best case scenario?

What is the financial break-even?