You are considering a new product launch. The project will cost $$2,375,000,$ have a four$-$year life, and have no salvage value; depreciation is straight$-$line to zero. Sales are projected at $340$ units per year; price per unit will be $$19,900,$ variable cost per unit will be $$14,150,$ and fixed costs will be $$730,000$ per year. The required return on the project is$11$ percent, and the relevant tax rate is $22$ percent.

a$.$ Based on your experience, you think the unit sales, variable cost, and fixed cost

projections given here 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?

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

c$.$ What is the cash break$-$even level of output for this project $($ignoring taxes$)?$

d$-1.$ What is the accounting break$-$even level of output for this project?

d$-2.$ What is the degree of operating leverage at the accounting break$-$even point?