Printing Equip Co. are considering a project that costs $180 000, has a 6 year life, and no salvage value. Assume that depreciation is straight line. The required return of Printing Equip is 10.5% on such projects. Sales are estimated at 28 000 units per year. Price per unit is $9, variable cost per unit is $3.20, and fixed costs are $35 000 per year. The tax rate is 35%.

A.) What is the accounting break-even point?

B.) Calculate the base case cash flow and NPV

C.) What is the degree of operating leverage?

D.) Suppose that you think that the sales projection is accurate only to within 15%. Evaluate the sensitivity of NPV to changes in that projection by showing the NPV in the best and worst case.

E.) Suppose the projections given are all accurate to within 4% except for sales volume, which is only accurate to within 10%. What are the upper and lower bounds for these projections?