A company which uses a discount rate of 12% for investment appraisal is considering the following project: 2 Time Initial investment Variable costs (6,500) 0 1 (20,000) (6,500 ) 18,500 (20,000) | 12,000 Cash inflows Net cash flow 18,500 12,000 Required: By what percentage can variable costs increase before the project becomes not worthwhile? a) b) c) d) 2.55% 4.31% 10.99% 25.5%