You are considering a new product launch. The project will cost $$1\mathrm{.}675$ million, have a four$-$year life, and have no salvage value; depreciation is straight$-$line to zero. Sales are projected at $195$ units per year, price per unit will be $$16,300$; variable cost per unit will be $$9,400$; and fixed costs will be $$550,000$ per year. The required return on the project is $12\%$ and the relevant tax rate is $21\%.$

a$.$ Based on your experience, you think the unit sales, variable cost, and fixed cost projections given here are probably accurate to with $+/-10\%.$ 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?

b$.$ Evaluate the sensitivity of your base$-$case NPV to changes in fixed costs.

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

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