We are evaluating a project that costs $520,000, 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 73,000 units per year. Price per unit is $45, variable cost per unit is $30, and fixed costs are $840,000 per year. The tax rate is 35 percent, and we require a return of 10 percent on this project.

a.Calculate the accounting break-even point.(Do not round intermediate calculations and round your final answer to nearest whole number (e.g., 32).)

Break-even point______units

b-1Calculate the base-case cash flow and NPV.(Do not round intermediate calculations and round your NPV answer to 2 decimal places (e.g., 32.16).)

Cash flow$______ NPV $_______

b-2What is the sensitivity of NPV to changes in the sales figure?(Do not round intermediate calculations and round your final answer to 3 decimal places (e.g., 32.161).)

NPV/Q$_______

b-3Calculate the change in NPV if sales were to drop by 500 units.(Enter your answer as a positive number.Do not round intermediate calculations and round your answer to 2 decimal places (e.g., 32.16).)

NPV would

decrease/increase

by $_______

c.What is the sensitivity of OCF to changes in the variable cost figure?(Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to nearest whole number (e.g., 32).)

OCF/VC$_______