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oblem 1 0 - 8 Sensitivity Analysis ( LO 3 ) peror's Clothes Fashions can invest $ 6 million in a new plant for producing

oblem 10-8 Sensitivity Analysis (LO3)
peror's Clothes Fashions can invest $6 million in a new plant for producing invisible makeup. The plant has an expected life of 5 ars, and expected sales are 7 million jars of makeup a year. Fixed costs are $3 million a year, and variable costs are $2.50 per jar. e product will be priced at $3.40 per jar. The plant will be depreciated straight-line over 5 years to a salvage value of zero. The portunity cost of capital is 10%, and the tax rate is 40%.
a. What is project NPV under these base-case assumptions?
Note: Do not round intermediate calculations. Enter your answer in millions, rounded to 2 decimal places.
b. What is NPV if variable costs turn out to be $2.60 per jar?
Note: Do not round intermediate calculations. Enter your answer in millions, rounded to 2 decimal places.
c. What is NPV if fixed costs turn out to be $2.2 million per year?
Note: Do not round intermediate calculations. Enter your answer in millions, rounded to 2 decimal places.
d. At what price per jar would the project's NPV equal zero?
Note: Enter your answer in dollars, not in millions. Do not round intermediate calculations. Round your answer to 2 decimal places.
\table[[a. NPV,],[b. NPV,],[c. NPV,],[d. Price,]]
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