A firm with required rate of return 10% and tax rate 20% evaluates the following 3-year in- vestment plan: Initial investment is $30,000 depreciated linearly to zero, project is expected to sell 1,000 additional units for $30 each. The variable cost is $10/unit and the project has also a fixed cost of $5,000/year.

1. Estimate the NPV of the project.

2. Do a sensitivity analysis on price, estimating the NPV for $25 and $35.

3. Do a sensitivity analysis on initial investment, estimating the NPV if the initial investment is $24,000 or $36,000.