You are considering a new product launch. The project will cost $$880,000,$ have a $4-$year

life, and have no salvage value; depreciation is straight$-$line to zero. Sales are projected

at $540$ units per year, price per unit will be $$19,000,$ variable cost per unit will be $$15,700,$

and fixed costs will be $$920,000$ per year. The required return on the project is $10$

percent, and the relevant tax rate is $21$ percent.

a$.$ The unit sales, variable cost, and fixed cost projections given above are probably

accurate to within $+-10$ percent. What are the upper and lower bounds for these

projections? What is the base$-$case NPV$?$ What are the best$-$case and worst$-$case

scenarios? $($A negative amount should be indicated by a minus sign. Do not round

intermediate calculations and round your NPV answers to $2$ decimal places, e$.$g$.,$

$32\mathrm{.}16.)$

B$.$ Calculate the sensitvity of your base$-$case NPV to changes in fixed Costs

NPV$/$FC

C$.$ What is the accounting break$-$even level of output for this project?

Accounting break$-$even