We are evaluating a project that costs $1.68 million, has a six-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 90,000 units per year. Price per unit is $37.95, variable cost per unit is $23.20, and fixed costs are $815,000 per year. The tax rate is 21 percent, and we require a return of 11 percent on this project. a. Calculate the base-case cash flow and NPV. Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b. What is the sensitivity of NPV to changes in the sales figure? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. If there is a 500-unit decrease in projected sales, how much would the NPV change? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. d. What is the sensitivity of OCF to changes in the variable cost figure? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. e. If there is a $1 decrease in estimated variable costs, how much would the increase in OCF be? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. a. Base-case cash flow NPV b. NPV sensitivity c. NPV change d. OCF sensitivity e. Change in OCF

We are evaluating a project that costs $1.68 million, has a six-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 90,000 units per year. Price per unit is $3795, varlable cost per unit is $23.20, and fixed costs are $815,000 per year. The tax rate is 21 percent, and we require a return of 11 percent on this project. a. Calculate the base-case cash flow and NPV. Note: Do not round intermediate calculations and round your answers to 2 decimal ploces, e.g., 32.16. b. What is the sensitivity of NPV to changes in the sales figure? Note: Do not round intermediate calculations and round your onswer to 2 decimal places, e.g., 32.16 . c. If there is a 500 -unit decrease in projected sales, how much would the NPV change? Note: A negotive answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g. 32.16 . d. What is the sensitivity of OCF to changes in the variable cost figure? Note: A negotive answer should be indicoted by a minus sign. Do not round intermediate colculations and round your answer to 2 decimal places, e.g., 32.16. e. If there is a $1 decrease in estimated variable costs, how much would the increase in OCF be? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16 . We are evaluating a project that costs $1.68 million, has a six-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 90,000 units per year. Price per unit is $3795, varlable cost per unit is $23.20, and fixed costs are $815,000 per year. The tax rate is 21 percent, and we require a return of 11 percent on this project. a. Calculate the base-case cash flow and NPV. Note: Do not round intermediate calculations and round your answers to 2 decimal ploces, e.g., 32.16. b. What is the sensitivity of NPV to changes in the sales figure? Note: Do not round intermediate calculations and round your onswer to 2 decimal places, e.g., 32.16 . c. If there is a 500 -unit decrease in projected sales, how much would the NPV change? Note: A negotive answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g. 32.16 . d. What is the sensitivity of OCF to changes in the variable cost figure? Note: A negotive answer should be indicoted by a minus sign. Do not round intermediate colculations and round your answer to 2 decimal places, e.g., 32.16. e. If there is a $1 decrease in estimated variable costs, how much would the increase in OCF be? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16