Blindfold Technologies Inc. (BTI) is considering whether to introduce a new line of hand scanners that can be used to copy material and then download it into a computer. These scanners are expected to sell for an average price of $100 each, and the company analysts performing the analysis expect that the firm can sell 100,000 units per year at this price for a period of five years, after which time they expect demand for the product to end as a result of a more advanced technology. In addition, the firms management expects that variable costs will be $20 per unit, and fixed costs, not including depreciation, are forecast to be $1,250,000 per year. To manufacture this product, BTI will need to buy a computerized production machine for $10 million that has an expected life of five years and no residual or salvage value. In addition, the firm expects it will have to invest an additional $450,000 in working capital to support the new business. Other pertinent information concerning the business venture is as follows: Initial cost of the machine $10,000,000 Expected life 5 years Salvage value of the machine $0 Working-capital requirement $450,000 Depreciation method Straight-line Depreciation expense $2,000,000 per year Cash fixed costsexcluding depreciation $1,250,000 per year Variable cost per unit $22.50 Required rate of return or cost of capital 10% Tax rate 20% a. Calculate the projects NPV. b. Determine the sensitivity of the projects NPV to a 10 percent decrease in the number of units sold. c. Determine the sensitivity of the projects NPV to a 10 percent decrease in the cost per unit. d. Determine the sensitivity of the projects NPV to a 10 percent increase in the variable cost per unit. e. Determine the sensitivity of the projects NPV to a 10 percent increase in the annual fixed operating costs. f. Use scenario analysis to evaluate the projects NPV under the worst- and bestcase scenarios for the projects value drivers. The values for the expected or basecase, worst-case, and best-case scenarios are as follows: