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 $20, and fixed costs are $800,000 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 answer to the nearest whole number, e.g., 32.)

Break-even point= 4500units

b-1The 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 $295,000

NPV $773,825

b-2What 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.)

NPV/Q$_____

b-3What is 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 woulddecrease by $_____

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.)

OCF/VC$_____