You are considering an investment project with the following financial information:

Required investment = $500,000

Project life = 5 years

Salvage value = $50,000

Depreciation method = straight-line deprecation (no half-year convention)

Unit price = $40

Unit variable cost = $18

Fixed annual cost = $230,000

Annual sales volume = 100,000 units

Tax rate = 35%

MARR = 15%

a) The company is concerned about the price estimate they have used to calculate the rate of return. Using sensitivity analysis in Excel, how much can the price vary to still break-even?

b) The company believes that their estimates for unit price, demand, variable cost, fixed cost, and salvage value are accurate to +/- 10%. Use scenario analysis in Excel compare the base case to the best-case and worst-case scenarios.