Q. A new project is being considered and the data is given below. The asset has a 3-year tax life, would be depreciated on a straight-line basis over the project's 3-year life, and would have a zero salvage value after Year 3. Operating working capital change would be of $1000. Revenues and other operating costs will be constant over the project's life. If the units decline by 45% from the expected level, find the change in NPV. Investment cost $60,000 Units 2,800 Price/Unit $25.00 Fixed costs $10,000 V cost/unit $5.375 Annual depreciation $20,000 WACC 10.0% Tax rate 40.0%

Solve using a financial calculator. Do it manually. Do not use Excel!