Need formulas along with the answers, thanks.

It's been four months since you took a position as an assistant financial analyst at Caledonia Products. During that time, you've had a promotion and you are now working as a special assistant for capital budgeting, reporting directly to the CEO. Your latest assignment involves the analysis of several risky projects. Because this is your first assignment dealing with risk analysis, you have been asked not only to provide a recommendation on the projects in question, but also to respond to a number of questions aimed at judging your understanding of risk analysis and capital budgeting. The memorandum you received outlining your assignment follows: Explain how sensitivity analysis and scenario analysis are useful tools for evaluating project risk. What are real options? How does the presence of optionality in the investments that firms mate cause the traditionally calculated NPV of a project to be underestimated? Explain how simulation works. What is the value of using a simulation approach? How can breakeven analysis be helpful in evaluating project risk? What is sensitivity analysis and what is its purpose? Now that they are comfortable with your skills, your boss would like you to look at a now project. This new project involves the purchase of a new plasma cutting tool that can be used in its metal works division. The products manufactured using the new technology are expected to sell for an average price of $300 per unit, and the company analyst performing the analysis expects the firm can sell 20,000 units per year at this price for a period of five years. To get into this business will require the purchase of a $2 million piece of equipment that has a residual or salvage value in five years of $200,000. In addition, the firm expects to have to invest an additional $300,000 in working capital to support the new business. Other pertinent information concerning the business venture is provided below: Initial cost of equipment $2,000,000 Project and equipment life 5 years Salvage value of equipment $200,000 Working capital requirement $300,000 Depreciation method Straight Line Depreciation expense $360,000 Discount rate or required rate of return 12% Tax rate 30% In addition, estimates for unit sales, selling price, variable cost per unit, and fixed cash operating expenses for the base-case, worst-case and best-case are described below: Estimate the cash flows for the investment under the base-case or expected value assumptions listed above. Calculate the project NPV for these cash flows. Evaluate the NPV of the investment under the worst' case assumptions provided above. Evaluate the NPV of the investment under the best-case assumptions provided above