Use the following base-case information: A project under consideration costs $750,000, has a five-year life, and has no salvage value. Depreciation is straight-line to zero. The required return is 17 percent, and the tax rate is 34 percent. Sales are projected at 500 units per year. Price per unit is $2,500, variable cost per unit is $1,500, and fixed costs are $200,000 per year.

Suppose you think that the unit sales, price, VC, and FC projections given here are accurate to within 5 percent.

a) What are the upper and lower bounds for these projections?

b) What is the base-case NPV? What are the best- and wors-case scenario NPVs?

Given the tax rate, and given the base-case projections above, what are the:

a) accounting,

b) cash, and,

c) financial break-even sales levels for this project?