Blinkeria is considering introducing a new line of hand scanners that can be used to copy material and then download it into a personal computer. These scanners are expected to sell for an average price of $$$$102$ each, and the company analysts performing the analysis expect that the firm can sell $110,000$ units per year at this price for a period of five$$ years, after which time they expect demand for the product to end as a result of new technology. In$$ addition, variable costs are expected to be $$$$21$ per unit and fixed$$ costs, not including$$ depreciation, are forecast to be $1,100,000$ per year. To manufacture this$$ product, Blinkeria will need to buy a computerized production machine for $$$$11$ million that has no residual or salvage$$ value, and will have an expected life of five years. In$$ addition, the firm expects it will have to invest an additional $304,000$ in working capital to support the new business. Other pertinent information concerning the business venture is provided$$ here:

Initial cost of the machine $$11,000,000$

Expected life $5$ years

Salvage value of the machine $$0$

Working capital requirement $$304,000$

Depreciation method straight line

Depreciation expense $$2,200,000$ per year

Cash fixed costs$$excluding depreciation $$1,100,000$ per year

Variable costs per unit $$21$

Required rate of return or cost

of capital $10\mathrm{.}2\%$

Tax rate $34\%$

a$.$Calculate the$$ project's NPV$.$

b$.$Determine the sensitivity of the$$ project's NPV to$$ a$($n$)12$ percent decrease in the number of units sold.

c$.$Determine the sensitivity of the$$ project's NPV to$$ a$($n$)12$ percent decrease in the price per unit.

d$.$Determine the sensitivity of the$$ project's NPV to$$ a$($n$)12$ percent increase in the variable cost per unit.

e$.$Determine the sensitivity of the$$ project's NPV to$$ a$($n$)12$ percent increase in the annual fixed operating costs.

f$.$Use scenario analysis to evaluate the$$ project's NPV under$$ worst$-$ and$$ best$-$case scenarios for the$$ project's value drivers. The values for the expected or$$ base$-$case along with the$$ worst$-$ and$$ best$-$case scenarios are listed$$ here:

Initial cost of the machine $$11,000,000$

Expected life $5$ years

Salvage value of the machine $$0$

Working capital requirement $$304,000$

Depreciation method straight line

Depreciation expense $$2,200,000$ per year

Cash fixed costs$$excluding depreciation $$1,100,000$ per year

Variable costs per unit $$21$

Required rate of return or cost of capital $10\mathrm{.}2\%$

Tax rate $34\%$