Part 2: Scenario Analysis (15 points) Prestige International has calculated their base case forecasts for manufacturing slippers. Annual Outlook: Unit sales per year = 1,600 units Price per unit initially = $120 Variable cost per unit = $90 (same VC per unit each year) Fixed cost per year = $12.000 (same FC per year) Tax Rate is 25% WACC is 14% NWC is fixed (either machine will require $20.000 up front to buy inventory) Equipment for manufacturing would have the following costs and depreciation schedule: Equipment Cost/Depreciation Basis is $150,000 Physical life of 6 years MACRS depreciation for 5-year asset life (20%, 32%, 19.2%, 11.52%, 11.52%, 5.76%) The equipment is expected to have a salvage value of $32,000 at the end of year 6. a. Calculate NPV for the base case scenario. b. Conduct scenario analysis and allow for 5% deviations (+ &-) on price, units sales, and variable cost. Specify the NPVs after allowing for the variation. (Note: best case scenario would reflect higher prices, higher unit sales, and lower costs. The opposite for worst case scenario.)