We are evaluating a project that costs $1,140,000, has a five-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 87,300 units per year. Price per unit is $34.40, variable cost per unit is $20.65, and fixed costs are $753,000 per year. The tax rate is 35 percent, and we require a return of 10 percent on this project.

Required: Base-case cash flow:

NPV:

Sensitivity of NPV:

If there is a 500-unit decrease in projected sales, how much wuold the NPV drop? Round to 2 decimal places. NPV drop:

Senstivity to OCF:

If there is a $1 decrease in estimated varialbe costs, how much would the increase in OFC be?

Increase in OCF: