The Buffalo Snow Shoe Company is considering manufacturing radial snow shoes, which are more durable and offer better traction. Buffalo estimates that the investment in manufacturing equipment will cost $220,000 and will have a 10-year economic life. Buffalo will depreciate the equipment on a straight-line basis to a $0 estimated salvage value over a 10-year period. The estimated selling price of each pair of shoes will be $60. Buffalo anticipates that it can sell 4,000 pairs a year at this price. Unit production and selling costs (exclusive of depreciation) will be about $40. The firm's marginal tax rate is 40 percent. A cost of capital of 15 percent is thought to be appropriate to analyze a project of this type. Buffalo has decided to perform a sensitivity analysis of the project before making a decision. Use Table IV to answer the questions. Round your answers to the nearest dollar. a. Compute the expected net present value of this project. $ b. Buffalo's president does not believe that 4,000 pairs of the new snow shoes can be sold at a $60 price. He estimates that a maximum of 2,000 pairs will be sold at this price. How does the change in the estimated sales volume influence the net present value of the project? The new NPV: $ The NPV -Select- The project appears -Select- TABLE N Present Value of an Annuity Interest Factor (PVIFA) ($1 per period at per period for a periods); PVIFA- PVAN- PMT (PVIFA.) Period, n 1% 1 2 3 5.601 5417 5242 6.472 6.230 6.002 7325 7.020 6.733 8.162 7.786 7.435 10 8.983 8.530 8.111 11 9.787 9.253 8.760 12 11.255 10.575 9.954 9.385 13 9.986 12.134 11.348 10.635 14 13.004 12.106 11.296 10.563 15 BTSDAAD2988 4 5 16 6 17 2245. 30 40 7 8 9 18 2 3 6 7 8 9 19 20 10 11 12 13 14 15 16 17 18 19 20 24 25 4% 2% 3% 0.990 0.980 0.971 0.962 1.970 1.942 1913 1.886 2.941 2.884 2.829 -2.775 3.902 4.853 5.795 6.728 7.652 8.566 9.471 10.368 13.865 14.718 15.562 3.808 3.717 4.713 4580 6.002 6.142 6.265 6.373 6.467 5.749 5.818 6.128 6.550 6.198 3.630 4.452 6.623 6.835 6.434 6.259 5.929 6.073 8.863 8.384 9.394 8.853 9.899 9.295 12.849 11.938 11.118 10.380 9.712 13.578 12.561 11.652 10.838 10.106 14.292 13.166 12.166 11.274 10.477 14.992 13.754 12.659 11.690 10.828 10.059 15.678 14.324 13.134 12.085 11.158 10.336 16.351 14.877 13.590 12.462 11.470 10.594 18914 16.936 15.247 13.799 12.550 11.469 19.523 17413 15.622 14.094 12.783 11.654 22.397 19.600 17.292 15.373 13.765 12.409 27.355 23.115 19.793 17.159 15.046 19.332 31424 25.730 21.482 18.256 15.762 13.801 34.761 27.676 22.623 18.929 16.161 14.039 15% 6.873 6.464 6.097 7.003 7.105 2433 6.566 6.642 6.233 6661 6.246 5% 0.952 1.859 2.723 3.546 4.329 5.076 5.786 6.463 7.108 5534 5.877 5.584 5.766 6.177 5.829 5.871 5.880 7.722 8.306 5.405 5.475 5.628 5.746 6% 0.943 1.833 2.673 3.465 4212 0.935 1.808 2.624 3.387 4.100 4.917 4.766 5.582 5.389 6.210 5.971 6.802 6.515 7.360 16398 17.226 18.046 24 21.243 25 22.023 30 25.808 40 32.835 50 39.196 60 44.955 Period, n 14% 16% 18% 19% 20% 24% 17% 0.855 0.847 1 0.877 0.870 0.862 0.840 0.833 0.806 1.647 1.626 1.605 1.585 1.566 1547 1.528 1.457 2322 2.283 2246 2210 2.174 2.140 2.106 1.981 2.404 2241 2.096 2.914 2.855 2.798 2743 2.690 2.639 2.589 3.433 3.352 3.274 3.199 3.127 3.058 2.991 2.745 2532 2.345 3.889 3.784 3.685 3.589 3.498 3.410 3.326 3.020 4288 4.160 4.039 3.922 3.812 3.706 3.605 3.242 4.639 4.487 4.344 4.207 4.078 3.954 3.837 3.421 4.946 4.772 4.607 4.451 4.303 5.216 5.019 4.833 4.659 4.494 5.453 5.234 5.029 4.836 4.656 4.486 5.660 5.421 5.197 4.988 4.793 4611 5.118 4.910 4.715 5.008 4.163 4.031 3.566 4339 4.193 4.327 4.439 3.851 5.842 5.342 5.583 4.533 3912 5.724 5.468 5.229 4.802 4611 3.962 5.847 5.575 5.324 5.092 4.876 4.675 4.001 5.954 5.669 5.162 4.938 4.730 6.047 5.222 4.990 4.775 5.273 5.033 4.812 5.316 4.844 4.870 4.937 4.948 7.024 7.887 7.499 5.353 5.451 5.467 5.517 5.548 5.554 8% 0.926 1.783 2577 3312 3.993 4623 5.206 5.070 5.101 5.182 5.195 5.235 5.258 5.262 7.943 7536 8.358 7.904 8.745 8.244 8.559 9.108 9.447 8.851 9.763 9.122 4.486 5.033 5.747 5.535 6.247 5.995 6710 6.418 7.139 6.805 96 0917 1.759 2.531 3.240 3.890 9372 9.604 4.979 4.997 4.999 7.786 7367 8.061 7.506 8.312 7.824 8.544 8022 8.201 8.365 9.818 9.128 8.514 10.529 9.707 8.985 10.675 9.823 9.077 11.258 10.274 9.427 11.925 10.757 9.779 12.233 10.962 9.915 12.377 8.756 8.950 7.161 7.487 7.103 10% 0.909 1.736 2487 3.682 3.776 3.170 3.791 4355 4.368 4.033 4.059 5.335 5.759 6.145 4.080 4.097 4.160 4.166 4.167 11% 0901 1.713 1.690 2444 2402 3.102-3037 3.696 3.605 4231 4111 4712 4.564 5.889 6.495 6.207 6.814 5.146 4.968 5.537 5328 6.492 6.750 6.982 7.191 7379 7549 8.422 7.843 8.694 8.055 8.951 8.244 9.042 8.304 11.048 9.967 9.074 8324 28% 32% 0.781 0.758 1.392 1.332 1.868 1.766 12% 0.893 7.702 7.839 7.963 7.469 8.348 7.784 3.529 3.539 4.110 3.546 3.113 4.143 3.562 3.121 4.147 3.564 3.122 3.569 3571 3571 3.013 3.040 3.061 3.459 3.483 3.076 3.503 3.088 3518 3.097 5.650 5.938 6.194 6:424 6.628 6811 6.974 7.120 3.124 3.125 3.125 7.250 7.366 2.759 2.534 2.399 2.937 2.678 3.076 2.786 3.184 2.868 3.269 2.930 3.335 2.978 3.387 3.427 36% 0.735 1.276 1.674 1966 2.181 2.740 2750 13% 0.885 1.668 2.361 2.974 3.517 3.998 4423 4.799 5.132 5426 5.687 2.168 2.263 2455 2540 2.331 2.603 2379 2.758 2.763 2767 3.104 3.109 2.770 2.772 2.776 2776 2.778 2.778 2.778 5.918 6.122 -6.302 6.462 6.604 6.729 6.840 6.938 7.025 7.283 7:330 7.496 7.634 7,675 7.687 2.650 2414 2.683 2438 2708 2727 40% 0.714 1.224 1.589 1.849 2035 2456 2469 2478 2.484 2.489 2492 2.494 2496 2.497 2.499 2.499 2.500 2.500 2.500