Ell-35 DEF. sensitivity alalvsis. no income taxes. EMA. adaptedl L'tl'T is an international manufacturer of fragrances for women. Management at LVT is considering expanding the product line to men's fragrances. From the best estimates of the marketing and production managers. annual sales fall for cashl for this new line are tobacco units at per unit: cash variable cost is 5\"] per unit; cash fbted cost is $5.\".m per vear. The invesbnent project requires HUM,\" of cash outow and has a project life of five vears. At the end of the ve-year useful life. there will be no terminal disposal value. Assume all ca sh ows occur at year-end except for initial investment amounts. Men's fragrance is a new market for Landom. and management is concerned about the reliabilitgr of the estimates. The controller has proposed applving sensitivitv analvsis to selected factors. Ignore income taxes in your computations. Landom's required rate of return on this project is 14%. Required 1. Calculate the net presentvalue ofthis investment proposal. 2. Calculate the effect on the net present value ofthe following two changes in assumptions. Il'l'reat each item independenv of the other.|I a. 59"- reduction in the selling price. b. 59"- increase in the variable cost per uniL 3. Discuss how management would use the data developed in requirements I and I in its consideration of the proposed capital investment