3. A project costs $1,400,000, has a four year life, and no re-sale value at the end of the project. Depreciation is straight-line to zero. The opportunity cost of capital is 9% and the tax rate is 34%. Sales are projected at 110 units per year. The price per unit is expected to be $30,000, variable costs are projected at $20,500 per unit, and fixed costs will be $515,000 per year. Cash flows from operations are received annually beginning in one year.

   1. (a) What is the NPV?

   2. (b) Conduct a sensitivity analysis with respect to selling price projections (only)

      assuming a pessimistic case and an optimistic case corresponding to plus/minus 10% of the base-case. Assume this project is part of an otherwise profitable corporation that pays corporate tax.

   3. (c) What are the accounting and economic break-even level of sales using expected values?