Emperors Clothes Fashions can invest $6 million in a new plant for producing invisible makeup. The plant has an expected life of 5 years, and expected sales are 7 million jars of makeup a year. Fixed costs are $3 million a year, and variable costs are $2.5 per jar. The product will be priced at $3.4 per jar. The plant will be depreciated straight-line over 5 years to a salvage value of zero. The opportunity cost of capital is 10%, and the tax rate is 40%.

a.	What is project NPV under these base-case assumptions?(Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

NPV

$million

b.	What is NPV if variable costs turn out to be $2.6 per jar?(Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

NPV

$million

c.	What is NPV if fixed costs turn out to be $2.2 million per year?(Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

NPV

$million

d.	At what price per jar would project NPV equal zero?(Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to 2 decimal places.)

Price

$per jar

a.	What is project NPV under these base-case assumptions?(Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

NPV

$million

b.	What is NPV if variable costs turn out to be $2.6 per jar?(Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

NPV

$million

c.	What is NPV if fixed costs turn out to be $2.2 million per year?(Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

NPV

$million

d.	At what price per jar would project NPV equal zero?(Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to 2 decimal places.)

Price

$per jar