You are considering a new product launch. The project will cost $$1,900,000,$ have a $4-$year life, and have no salvage value; depreciation is straight$-$line to $0.$ Sales are projected at $180$ units per year; price per unit will be $$23,000$; variable cost per unit will be $$14,500$; and fixed costs will be $$530,000$ per year. The required return on the project is $15\%,$ and the relevant tax rate is $35\%.$

a$.$ Based on your experience, you think the unit sales, variable cost, and fixed cost projections given here are probably accurate to within $\backslash$pm $10\%.$ 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? $($Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Round the final NPV answers to $2$ decimal places. Omit $ sign in your response.$)$

Scenario Unit Sales Variable Cost Fixed Costs NPV

Base

$180$

$

$14500$

$

$530000$

$

Best

$198$

$

$13050$

$

$477000$

$

Worst

$162$

$

$15950$

$

$583000$

$

b$.$ Evaluate the sensitivity of your base$-$case NPV to changes in fixed costs. $($Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Round the final answer to $3$ decimal places. Omit $ sign in your response.$)$

$\backslash$Delta NPV$/\backslash$Delta FC $

c$.$ What is the cash break$-$even level of output for this project $($ignoring taxes$)?($Round the final answers to the nearest whole unit.$)$

Cash break$$even

$62$

units

d$-1.$ What is the accounting break$-$even level of output for this project? $($Round the final answers to the nearest whole unit.$)$

Accounting break$$even

$118$

units

d$-2.$ What is the degree of operating leverage at the accounting break$-$even point? $($Round the final answer to $4$ decimal places.$)$

Degree of operating leverage