We are evaluating a project that costs $1,398,000, has asix-year life, and has no salvage value. Assume that depreciationis straight-line to zero over the life of the project. Sales areprojected at 87,800 units per year. Price per unit is $34.65,variable cost per unit is $20.90, and fixed costs are $758,000 peryear. The tax rate is 40 percent, and we require a return of 11percent on this project.

Calculate the base-case operating cash flow and NPV. (Donot round intermediate calculations and round your answers to 2decimal places, e.g., 32.16.)

  

Base-case operating cash flow	$
NPV	$

  

What is the sensitivity of NPV to changes in the sales figure?(Do not round intermediate calculations and round youranswer to 3 decimal places, e.g., 32.161.)

  

Sensitivity of NPV           $

  

If there is a 500-unit decrease in projected sales, how muchwould the NPV drop? (Input your answer as a positive value.Do not round intermediate calculations and round your answer to 2decimal places, e.g., 32.16.)

  

NPV drop           $

  

What is the sensitivity of OCF to changes in the variable costfigure? (A negative answer should be indicated by a minussign. Do not round intermediate calculations and round your answerto the nearest whole number, e.g., 32.)

  

Sensitivity of OCF           $

  

If there is $1 decrease in estimated variable costs, how muchwould the increase in OCF be? (Do not round intermediatecalculations and round your answer to the nearest whole number,e.g., 32.)

  

Increase in OCF           $