BASE CASE						Year
				1	2	3	4	5
Number of units sold per year:				100	100	100	100	100
Unit sales price:				$10,000	$10,000	$10,000	$10,000	$10,000
Revenue:				$1,000,000	$1,000,000	$1,000,000	$1,000,000	$1,000,000
Variable cost per unit:				$5,000	$5,000	$5,000	$5,000	$5,000
Variable cost per year:				$500,000	$500,000	$500,000	$500,000	$500,000
Fixed Cost:				$125,000	$125,000	$125,000	$125,000	$125,000
Total operating cost per year:				$625,000	$625,000	$625,000	$625,000	$625,000
Annual Revenue - Operating cost:				$375,000	$375,000	$375,000	$375,000	$375,000
Depreciation per year:				$200,000	$200,000	$200,000	$200,000	$200,000
Tax Savings (tD) per year:				$80,000	$80,000	$80,000	$80,000	$80,000
Cash flow per year:			($1,000,000)	$305,000	$305,000	$305,000	$305,000	$305,000
Capital Investment:		$1,000,000
Minimum Acceptable Rate of return:			10.0%
NPV= $156,190.
NPV =	$156,190	(A) If the number of snowmobiles went from 100 units per year being sold in the Base Case to 150 per year, what is the new NPV at the minimum acceptable return of 10% ? (B) Using the spreadsheet for the Base Case (number of snowmobiles sold per year is $100): i.What is the IRR of the business ? ii.From the Base Case, how low can the number of snowmobile sales go to in order to have an NPV of zero ? This is called the breakeven point. iii.You get good news from your team ! Your marketing team forecasts that sales of the snowmobiles will be 120 per year which is better than in the Base Case. How much can you now afford to invest and still get a 10% return ?