$($Related to Checkpoint $13\mathrm{.}2$ and Checkpoint $13\mathrm{.}3)($Comprehensive risk analysis$)$ Blinkeria is considering introducing a new line of hand scanners that can be used to copy material and then download it intcta personal computer. These scanners are expected to sell for an average price of $$98$ each, and the company analysts performing the analysis expect that the firm can sell $106,000$ units per year at this price for a period of five years after which time they expect demand for the product to end as a result of new technology. In addition, variable costs are expected to be $$18$ per unit and fixed costs, not including depreciation, are forecast to be $$1,030,000$ per year. To manufacture this product, Blinkeria will need to buy a computerized production machine for $$9$ million that has no residual or salvage value, and will have an expected life of five years. In addition, the firm expects it will have to invest an additional $$302,000$ in working capital to support the new business. Other pertinent information concerning the business venture is provided here:

Initial cost of the machine:$$9,000,000$

Expected life:$5$yrs

Salvaged value of the machine:$$0$

Working capital requirement:$$302,000$

Depreciation method:straight line

Depreciation expense: $$1,800,000$ per yr

Cash fixed costs$-$excluding depreciation:$$1,030,000$ per yr

Variable costs per unit:$$18$

Required rate of return or cost of capital $10\mathrm{.}6\%$

Tax rate: $34\%$

a$.$ Calculate the project's NPV$.$

b$.$ Determine the sensitivity of the project's NPV to a$($n$)12$ percent decrease in the number of units sold.

c$.$ Determine the sensitivity of the project's NPV to a$($n$)12$ percent decrease in the price per unit.

d$.$ Determine the sensitivity of the project's NPV to a$($n$)12$ percent increase in the variable cost per unit.

e$.$ Determine the sensitivity of the project's NPV to a$($n$)12$ percent increase in the annual fixed operating costs.

f$.$ Use scenario analysis to evaluate the project's NPV under worst$-$ and best$-$case scenarios for the project's value drivers. The values for the expected or base$-$case along with the worst$-$ and best$-$case scenarios are listed here: