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  3. (a) you are considering a new product launch. the

(a) You are considering a new product launch. The project will cost Tk.760,000, have a...

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Accounting

(a) You are considering a new product launch. The project will cost Tk.760,000, have a four-year life, and have no salvage value; depreciation is straight line to zero. Sales are projected at 420 units per year; price per unit will be Tk.17,200; variable cost per unit will be Tk.14,300; and fixed costs will be Tk.640,000 per year. The required return on the project is 15 percent, and the relevant tax rate is 35 percent.
Required:
(i) 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?
(ii) Evaluate the sensitivity of your base-case NPV to changes in fixod costs.
(iii) What is the accounting break-even level of output for this project?
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