We are evaluating a project that costs $1,180,000, 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 88,100 units per year. Price per unit is $34.80, variable cost per unit is $21.05, and fixed costs are $761,000 per year. The tax rate is 40 percent, and we require a return of 10 percent on this project.

Requirement 1: Calculate the base-case cash flow and NPV. Base-case cash flow $

NPV $

Requirement 2: What is the sensitivity of NPV to changes in the sales figure? (Do not round intermediate calculations. Round your answer to 3 decimal places (e.g., 32.161).) Sensitivity of NPV $

Requirement 3: If there is a 500-unit decrease in projected sales, how much would the NPV drop? NPV drop $

Requirement 4: What is the sensitivity of OCF to changes in the variable cost figure? Sensitivity of OCF $

Requirement 5: If there is $1 decrease in estimated variable costs, how much would the increase in OCF be? Increase in OCF $