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Question 8 (32 points) Manuka Corporation is considering a four-year project for a new product launch. The project will require an initial investment of $2,400,000 in fixed asset. The initial fixed asset investment has a four-year life and will have zero market value at the end of its life. Depreciation is straight-line to zero over the four-year project life. The marketing team estimates that the company can sell 240 units per year; the price per unit will be $38,000, variable cost per unit will be $18,000, and fixed costs will be $300,000 per year. The required return on the project is 12%, and the tax rate is 30%. a. The company believes sales price, unit sales, variable cost and fixed cost projections are accurate to within +5 percent. What are the base-case, worst-case, and best-case scenarios NPV? (12 points) b. What is the sensitivity of NPV to changes in unit sales? (Assume the unit sales reduce by 2.5%) (6 Points) c. What are the accounting break-even quantity, cash break-even quantity, and financial break-even quantity (ignoring taxes)? (14 points) Question 8 (32 points) Manuka Corporation is considering a four-year project for a new product launch. The project will require an initial investment of $2,400,000 in fixed asset. The initial fixed asset investment has a four-year life and will have zero market value at the end of its life. Depreciation is straight-line to zero over the four-year project life. The marketing team estimates that the company can sell 240 units per year; the price per unit will be $38,000, variable cost per unit will be $18,000, and fixed costs will be $300,000 per year. The required return on the project is 12%, and the tax rate is 30%. a. The company believes sales price, unit sales, variable cost and fixed cost projections are accurate to within +5 percent. What are the base-case, worst-case, and best-case scenarios NPV? (12 points) b. What is the sensitivity of NPV to changes in unit sales? (Assume the unit sales reduce by 2.5%) (6 Points) c. What are the accounting break-even quantity, cash break-even quantity, and financial break-even quantity (ignoring taxes)? (14 points)