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We are evaluating a project that costs $ 2 , 1 0 0 , 0 0 0 , has a 7 - year life, and

We are evaluating a project that costs $2,100,000, has a 7-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 98,600 units per year. Price per unit is $37.79, variable cost per unit is $23.90, and fixed costs are $857,000 per year. The tax rate is 24 percent, and we require a return of 10 percent on this project.
a. Calculate the base-case operating 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 3 decimal places, e.g.,32.161.
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 the nearest whole number, e.g.,32.
e. If there is a $1 decrease in estimated variable costs, how much would the OCF change?
Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g.,32.
\table[[a. Base-case operating cash flow],[Base-case NPV],[b. NPV sensitivity],[c. NPV change],[d. OCF sensitivity],[e. OCF change]]
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