The expected annual free cash flow for a GPS tracker investment is computed as follows:

REVENUES	$ 1,250,000
Variable Cost	750,000
Fixed Expenses	250,000
GROSS PROFIT	$ 250,000
Depreciation	100,000
NET OPERATING INCOME	$ 150,000
Income Tax	51,000
NOPAT	$ 99,000
Plus: Depreciation	100,000
Less: CAPEX	-
Less: Working Capital Investment	-
Free Cash Flow	$ 199,000

A. Construct a spreadsheet model to compute free cash flow that relies on the following assumptions or estimates:

Base Case Estimates	Values
Initial Cost of Equipment	$ 1,000,000
Project and Equipment Life	10 years
Salvage Value of Equipment	0
Working Capital Requirement	0
Depreciation Method	Straight-line
Depreciation Expense	$ 100,000
Discount Rate	10 %
Tax Rate	34 %
Unit Sales	10,000
Price per Unit	$ 125
Variable Cost per Unit	$ 75
Fixed Costs	$ 250,000

B. What level of annual unit sales does it take for the investment to achieve a zero NPV? Use your spreadsheet model to answer this question (Hint: Use the Goal seek function in Excel).

C. If unit sales were 15% higher than the base case, what unit price would it take for the investment to achieve a zero NPV?