Question 1) A firm is considering opening a division to manufacture kayaks. The up-front cost of opening the kayak division is $20 million. The firm expects the new division to sell 12 thousand kayaks a year at a sale price of $1400 per kayak. The variable cost of producing each kayak is expected to be $900. The firm expects to have fixed costs of $3 million per year associated with the kayak division. Finally, the firm will have annual depreciation of $2 million associated with the kayak division. Each of these forecasts is expected to hold each year in the future forever. The firm's tax rate is 27%. The appropriate discount rate for the kayak division is 12% per year compounded annually. What is the sensitivity of the net present value of the kayak division to the number of kayaks the firm sells each year? Round all intermediate calculations to 6 decimal points. Your final answer should be within $5.00 of the correct answer choice. 1) $5,522.82 2) $4,913.11 3) $3,041.67 4) $8,313.75