D-2. Using OCFbase from(b),what is the degree of operating leverage?

You are considering a new product launch. The project will cost $2,350,000, have a 4-year life, and have no salvage value; depreciation is straight-line to O. Sales are projected at 150 units per year; price per unit will be $31,000; variable cost per unit will be $19,000; and fixed costs will be $620,000 per year. The required return on the project is 14%, and the relevant tax rate is 34%. a. Based on your experience, you think the unit sales, variable cost, and fixed cost projections given here are probably accurate to within +10%. What are the upper and lower bounds for these projections? What is the base-case NPV? What are the best-case and worst-case scenarios? (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Round the final NPV answers to 2 decimal places. Omit $ sign in your response.) Scenario Unit Sales 150 Variable Cost $ 19000 Fixed Costs $ 620000 NPV $ 501213.18 Base Best 165 $ 17100 $ 558000 $ 1569467.52 Worst 135 $ 20900 $ 682000 $-457427.31 b. Evaluate the sensitivity of your base-case NPV to changes in fixed costs. (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Round the final answer to 3 decimal places. Omit $ sign in your response.) ANPV/AFC $ -1.92 c. What is the cash break-even level of output for this project (ignoring taxes)? (Round the final answers to the nearest whole unit.) Cash break-even 51.67 units d-1. What is the accounting break-even level of output for this project? (Round the final answers to the nearest whole unit.) Accounting break-even 100.63 units