A project under consideration costs $600,000, has a five-yearlife and has no salvage value. Depreciation is straight-line tozero. The firm has made the following projections related to thisproject: Base Case Lower Bound Upper Bound Unit Sales 3,000 2,850 3,150 Price Per Unit $300 $285 $315 Variable Cost Per Unit $170 $160 $180 Fixed Costs $150,000 $135,000 $165,000 The required return is 16 percent and the tax rate is 40 percent.No additional investment in net working capital is required.

Requirement 1:

What are the worst-case and best-case scenarios for thisproject? (Input unit sales as number of units. Round allother answers to the nearest whole dollar (e.g.,32).)

  

	Worst Case	Best Case
Unit Sales
Price Per Unit	$	$
Variable Cost Per Unit	$	$
Fixed Costs	$	$

  

Requirement 2:

Your analysis of the project's NPV in the "base case" shows aNPV of $28,664. However, your boss has asked you to determine thesensitivity of the project's NPV to potential changes in fixedcosts. Using the firm's estimate of the highest possible level offixed costs, complete the table below and use your results toassess the sensitivity of the project's NPV to changes in fixedcosts. (Round all answers except your sensitivity estimateto the nearest whole dollar (e.g., 32). Round the sensitivityestimate to 2 decimal places (e.g., 32.16). Negative amounts shouldbe indicated by a minus sign.)

  

Sales	$
Variable Costs	$
Fixed Costs	$
Depreciation	$
EBIT	$
Taxes	$
Net Income	$
Operating Cash Flow	$
Net Present Value (NPV)	$

  

Sensitivity (?NPV/?FC)

$