Consider a project to supply Detroit with 27,000 tons of machinescrews annually for automobile production. You will need an initial$4,600,000 investment in threading equipment to get the projectstarted; the project will last for 5 years. The accountingdepartment estimates that annual fixed costs will be $1,100,000 andthat variable costs should be $205 per ton; accounting willdepreciate the initial fixed asset investment straight-line to zeroover the 5-year project life. It also estimates a salvage value of$475,000 after dismantling costs. The marketing departmentestimates that the automakers will let the contract at a sellingprice of $308 per ton. The engineering department estimates youwill need an initial net working capital investment of $440,000.You require a return of 12 percent and face a tax rate of 23percent on this project.

  

a-1.	What is the estimated OCF for this project? (Do notround intermediate calculations and round your answer to thenearest whole number, e.g., 32.)
a-2.	What is the estimated NPV for this project? (Do notround intermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.)
b.	Suppose you believe that the accounting department’s initialcost and salvage value projections are accurate only to within ±5percent; the marketing department’s price estimate is accurate onlyto within ±10 percent; and the engineering department’s net workingcapital estimate is accurate only to within ±15 percent. What areyour worst-case and best-case NPVs for this project? (Anegative answer should be indicated by a minus sign. Do not roundintermediate calculations and round your answers to 2 decimalplaces, e.g., 32.16.)