Emperors Clothes Fashions can invest $7 million in a new plant for producing invisible makeup. The plant has an expected life of 5 years, and expected sales are 8 million jars of makeup a year. Fixed costs are $2.1 million a year, and variable costs are $1.20 per jar. The product will be priced at $2.70 per jar. The plant will be depreciated straight-line over 5 years to a salvage value of zero. The opportunity cost of capital is 12%, and the tax rate is 40%.

What is Project NPV Under these base-case assumptions?

What is NPV if variable cost turn out to be $1.80 a jar?

What is NPV if fixed cost turns out to be $1.70 million per year?

At what price per jar would project NPV equal zero?