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We are evaluating a project that costs $ 8 0 0 , 0 0 0 , has an eight - year life, and has no

We are evaluating a project that costs $800,000, has an eight-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 60,000 units per year. Price per unit is $40, variable cost per unit is $21, and fixed costs are $800,000 per year. The tax rate is 21 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 answer to 2 decimal places, e.g.,32.16.)
b-1. Calculate 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.)
b-2. What is the sensitivity of NPV to changes in the sales figure? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g.,32.161.)
b-3. Calculate 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.)
c. What is the sensitivity of OCF to changes in the variable cost figure? (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.)

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