e. As the CEO of your company, you are considering a new project that requires 600,000 capital expenditure. The project will last for 6 years and the relevant equipment will be depreciated straight line over the project period. The salvage value will be zero. Based on the investigation by your marketing team, you believe the product can be sold 4,000 units per year at a price 200 per unit. The cost per unit is 100. The firm is in the 20% tax bracket and its cost of capital is 10%. REQUIRED: i. Please calculate the NPV of this project based on the information given above. [6 marks) 1. The new product from this project will affect the sales of other existing products of your company. Specifically, during the period of this project, you expect this project will increase the sales of Product A by 300,000 per year but reduce the sales of Product B by 100,000. Based on this consideration, do you need to adjust your NPV calculation above? If you need to adjust it, please update your NPV calculation. If you do not need to adjust it, please explain the reasons. [9 marks) 3 iii. In practice, the situation in product market varies quickly and there is uncertainty about the demand for the new product. For example, the sale price in reality may be different from the value given above. To understand how sensitive the NPV calculation in Part iis, to the sale price, please calculate the elasticity of the NPV with respect to sale price. (9 marks] iv. You also have an alternative project that will last for 3 years only. The initial investment will be lower, which is only 200,000. The equipment will be depreciated straight line over the project period and the salvage value will be zero. 3,500 units of the product can be sold per year at a price 180 per unit. The cost per unit is 80. Due to the capital constraints, you can only carry one project. If you prefer a larger annual benefit, should you choose this project lasting for 3 years or the project described in Parti? Please justify your decision. (11 marks]