c)An investment of $80,000 today is expected to give rise to annual contribution of $45,000. This is based on selling one product, a volume of 15,000 units, selling price of $16.50 and variable cost of $12. Annual fixed cost of $11,000 will be incurred for the next four years; the discount rate is 10%.

Required (calculation must be in percentage form):

(a) Calculate the NPV of this investment.

(b) Calculate the sensitivity of your calculation to the following using this formula, NPV/ Present Value of cash flow under consideration:

i. Initial investment

ii. Selling price per unit

iii. Variable cost per unit

iv. Sales volume

v. Fixed costs

vi. Discount rate