Sensitivity Analysis and Break-even. We are evaluating a project that costs $1.68 million, and

has a six-year life and no salvage value. Assume that depreciation is straight-line to zero over

the life of the project. Sales are projected at 90 000 units per year. Price per unit is $37.95,

variable cost per unit is $23.20 and fixed costs are $815 000 per year. The tax rate is 30%,

and we require a return of 11% on this project.

a. Calculate the base-case cash flow and NPV. What is the sensitivity of NPV to changes

in the sales figure? Explain what your answer tells you about a 500-unit decrease in

projected sales.

b.What is the sensitivity of OF to changes in the variable cost figure? Explain what your

answer tells you about a $1 decrease in estimated variable costs.

Scenario Analysis. In the previous problem, suppose the projections given for price, quantity,

variable costs and fixed costs are all accurate to within +10%. Calculate the best-case and

worst-case NPV figures.

Please help me to answer the question, no excel please