We are evaluating a project that costs $732,000, five year plan. No salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at $55,000 units per year. Price per unit is $60, variable cost per unit is $30, and fixed cost are $732,000 per year. The tax rate is 35 percent and we require a return of 12 percent on this return. What is the accounting break-even point?

Calculate the base-case cash flow and NPV

What is the sensitivity of NPV to changes in the sales figures?

Calculate the change in NPV if sales were to drop by 500 units

NPV would increase or decrease by?

What is the sensitivity of OCF to changes in the variable cost figure?