We are evaluating a project that costs $843279, 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 58057 units per year. Price per unit is $39, variable cost per unit is $21, and fixed costs are $415390 per year. The tax rate is 35%, and we require a return of 19% on this project.

In percentage terms, what is the sensitivity of NPV to changes in the units sold projection? (Round answer to 2 decimal places. Do not round intermediate calculations)

Correct Answer

2.92

How do you arrive at this answer?