We are evaluating a project that costs $896,000, has an 7-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 139,000 units per year. Price per unit is $43, variable cost per unit is $20, and fixed costs are $896,896 per year. The tax rate is 34 percent, and we require a 14 percent return on this project. (

d) Based on this sensitivity, what is the change in NPV (in dollars) if there is a 11 percent decrease in projected sales? (Do not round your intermediate calculations.) (Click to select)

Requirement 3: Sensitivity of OCF

(a) In addition to NPV, we can calculate the sensitivity of other things, such as OCF. What is the sensitivity of base-case OCF to changes in the variable cost? Estimate the sensitivity by increasing variable costs by 10%. (Do not round your intermediate calculations.) (Click to select)

(b) Based on this sensitivity, estimate the change in OCF (in dollars) given a 14% decrease in the variable costs? (Do not round your intermediate calculations.)