(Related to Checkpoint 13.2 and Checkpoint 13.3) (Comprehensive risk analysis) Blinkeria is considering introducing a new line of hand scanners that can be used to copy material and then download it into a personal computer. These scanners are expected to sell for an average price of $102 each, and the company analysts performing the analysis expect that the firm can sell 102,000 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 $20 per unit and fixed costs, not including depreciation, are forecast to be $1,090,000 per year. To manufacture this product, Blinkeria will need to buy a computerized production machine for $9.8 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 $301,000 in working capital to support the new business. Other pertinent information concerning the business venture is provided here: : a. Calculate the project's NPV. b. Determine the sensitivity of the project's NPV to a(n) 8 percent decrease in the number of units sold. c. Determine the sensitivity of the project's NPV to a(n) 8 percent decrease in the price per unit. d. Determine the sensitivity of the project's NPV to a(n) 8 percent increase in the variable cost per unit. e. Determine the sensitivity of the project's NPV to a(n) 8 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: Initial cost of the machine Expected life Salvage value of the machine Working capital requirement Depreciation method Depreciation expense Cash fixed costs-excluding depreciation Variable costs per unit Required rate of return or cost of capital Tax rate $9,800,000 5 years $0 $301,000 straight line $1,960,000 per year $1,090,000 per year $20 9.5% 34% Best Case Unit sales Price per unit Variable cost per unit Cash fixed costs per year Depreciation expense Expected or Base Case 102,000 $102 $(20) $(1,090,000) $(1,960,000) Worst Case 70,380 $93.84 $(22.40) $(1,308,000) $(1,960,000) 133,620 $120.36 $(18.40) $(991,900) $(1,960,000)