You are considering a new product launch. The project will cost $$2,125,000,$ have a four$-$

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

projected at $240$ units per year; price per unit will be $$18,900,$ variable cost per unit will

be $$12,650,$ and fixed costs will be $$630,000$ per year. The required return on the

project is $9$ 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? $($A negative answer should be indicated by

a minus sign. Do not round intermediate calculations. Round your NPV answers to

$2$ decimal places, e$.$g$.,32\mathrm{.}16.$ Round your other answers to the nearest whole

number, e$.$g$.32.)$

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

negative answer should be indicated by a minus sign. Do not round intermediate

calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

c$.$ What is the cash break$-$even level of output for this project $($ignoring taxes$)?($Do not

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

$32\mathrm{.}16.)$

d$-1.$ What is the accounting break$-$even level of output for this project? $($Do not round

intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

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

not round intermediate calculations and round your answer to $3$ decimal places,

e$.$g$.,32\mathrm{.}161.)$