Question 2 Andrew Corporation Ltd is considering to supply Toyota Ltd with 30,000 pieces of screws per year for motor production. During the project, it will need to pay an initial $3,000,000 investment cost in production engine and the project will last for five years. The CFO estimates that annual fixed costs will be $450,000 and that variable costs should be $150 per piece; accounting will depreciate the initial fixed asset investment straight-line to zero over the five years. The firm needs to make an initial net working capital investment of $300,000. The salvage value is $500,000 after dismantling costs. The sales manager predicts that the selling price will be $200 per piece. The firm requires a 10 percent return and faces a marginal tax rate of 20 percent on this project. a. What is the NPV for this project? (5 points) Should the firm accept the project? (5 points) b. Based on the experience, the CEO believes that the initial cost and salvage value projections are accurate only to within +20 percent; the selling price estimate is accurate only to within +10 percent; What are the best- and worst-case scenario NPVs? (10 points) c. As a shareholder of a firm that is planning a new project, would you be more concerned with the accounting break-even point, the cash break-even point, or the financial break-even point? Why? (5 points)