The NorCal Tooling Factory is considering a project to supply Detroit with 22,500 tons of machine screws annually for automobile production. The NorCal Tooling Factory will need an initial $3,750,000 investment in threading equipment to get the project started; the project will last for four years. The accounting department estimates that annual fixed costs will be $875,000 and that variable costs should be $255 per ton; accounting will depreciate the initial fixed asset investment straight-line to zero over the four-year project life. It also estimates a salvage value of $230,000 after dismantling costs. The marketing department estimates that the automakers will approve the contract at a selling price of $382.50 per ton. The engineering department estimates The NorCal Tooling Factory will need an initial net working capital investment of $365,000. Consider, the units produced, sales price, variable costs, and fixed costs to be accurate within +/- 7.5% of the projections. Also consider, that the NorCal Tooling Factory is offered a similar contract with a Detroit competitor that has a net present value of $239,000, but it comes with a non-compete clause that will not allow you to pursue the contract with Detroit. The NorCal Tooling Factory requires a return of 14.8 percent and face a marginal tax rate of 35 percent on this project. You and your team are the part of the corporate finance division and have been tasked by the NorCal Tooling Factory's VP-Capital Projects, Cynthia Anniston, to evaluate this project. The VP would like to know the following: What is the base case scenario NPV of the Detroit Contract? What is the IRR for the base-case scenario? What is the payback period for the Detroit Contract? What is the sensitivity of the project NPV to changes in the quantity supplied ANPV/AQ? What is the sensitivity of the project NPV to changes in the variable costs ANPV/AVC? What is the sensitivity of the project NPV to changes in the fixed costs ANPV/AFC? Which of these features are the most sensitive to changes with respect to NPV? The NorCal Tooling Factory is considering a project to supply Detroit with 22,500 tons of machine screws annually for automobile production. The NorCal Tooling Factory will need an initial $3,750,000 investment in threading equipment to get the project started; the project will last for four years. The accounting department estimates that annual fixed costs will be $875,000 and that variable costs should be $255 per ton; accounting will depreciate the initial fixed asset investment straight-line to zero over the four-year project life. It also estimates a salvage value of $230,000 after dismantling costs. The marketing department estimates that the automakers will approve the contract at a selling price of $382.50 per ton. The engineering department estimates The NorCal Tooling Factory will need an initial net working capital investment of $365,000. Consider, the units produced, sales price, variable costs, and fixed costs to be accurate within +/- 7.5% of the projections. Also consider, that the NorCal Tooling Factory is offered a similar contract with a Detroit competitor that has a net present value of $239,000, but it comes with a non-compete clause that will not allow you to pursue the contract with Detroit. The NorCal Tooling Factory requires a return of 14.8 percent and face a marginal tax rate of 35 percent on this project. You and your team are the part of the corporate finance division and have been tasked by the NorCal Tooling Factory's VP-Capital Projects, Cynthia Anniston, to evaluate this project. The VP would like to know the following: What is the base case scenario NPV of the Detroit Contract? What is the IRR for the base-case scenario? What is the payback period for the Detroit Contract? What is the sensitivity of the project NPV to changes in the quantity supplied ANPV/AQ? What is the sensitivity of the project NPV to changes in the variable costs ANPV/AVC? What is the sensitivity of the project NPV to changes in the fixed costs ANPV/AFC? Which of these features are the most sensitive to changes with respect to NPV