We are evaluating a project that costs $840,990, 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 55,531 units per year. Price per unit is $43, variable cost per unit is $15, and fixed costs are $415,842 per year. The tax rate is 35%, and we require a return of 22% on this project.

In dollar terms, what is the sensitivity of NPV to changes in the units sold projection? The sensitivity is just the first order condition in the calculus. For example, in our question, the sensitivity of NPV changes associate change in the units sold as an example. The sensitivity means the NPV changes associate 1% change in units sold. Thus, the change starting points and ending points will not affect the question.