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You will use this information for SIX QUESTIONS. Esfandairi Enterprises is considering a new three- year expansion project that requires an initial fixed asset investment

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You will use this information for SIX QUESTIONS. Esfandairi Enterprises is considering a new three- year expansion project that requires an initial fixed asset investment of $21.0 million. This fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is expected to sell one million units each year at a price per unit of $16.50 and a cost per unit of $5.40, however actual cost and price may be 10% higher or lower than these expected values. Fixed costs will be $4 million per year. The tax rate is 21 percent and the required return on the project is 11.4 percent. What is the NPV's sensitivity to price per unit? None of these is correct The NPV could be as low as $9.10million The NPV could be as low as -$2.30million $6.98million The NPV could be as low as The NPV could be as low as $7.89million

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