Costco Ltd. purchased a $5,500,000 machine to produce high-quality laptops. The machine can be used for 10 years and is depreciated at a 20% CCA rate. We assume that no NWC is required. The machine can be sold for $100,000 in 10 years, with no other assets. The number of laptops that can be produced and sold per year is 2,500, and the sales price per laptop is $1,800. Use the following information to answer the questions:

Variable costs account for 60% of total revenues per year

Fixed costs per year = $120,000

Tax rate =35%

Discount rate = 8%

1. calculate the NPV of this investment.

2. if the price per laptop is $1,500, and variable costs are 70% of sales, re-calculate the NPV. What can you conclude based on this analysis?