You are considering a new product launch. The project will cost $830,000, have a 4-year life,...

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You are considering a new product launch. The project will cost$830,000, have a 4-year life, and have no salvage value;depreciation is straight-line to zero. Sales are projected at 470units per year; price per unit will be $18,500, variable cost perunit will be $15,200, and fixed costs will be $845,000 per year.The required return on the project is 10 percent, and the relevanttax rate is 21 percent.

a.
The unit sales, variable cost, and fixed cost projections givenabove are probably accurate to within ±10 percent. What are theupper and lower bounds for these projections? What is the base-caseNPV? What are the best-case and worst-case scenarios?
b.
Calculate the sensitivity of your base-case NPV to changes infixed costs. (A negative amount should be indicated by aminus sign. Do not round intermediate calculations and round youranswer to 3 decimal places, e.g., 32.161.)
c.
What is the accounting break-even level of output for thisproject?

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You are considering a new product launch. The project will cost$830,000, have a 4-year life, and have no salvage value;depreciation is straight-line to zero. Sales are projected at 470units per year; price per unit will be $18,500, variable cost perunit will be $15,200, and fixed costs will be $845,000 per year.The required return on the project is 10 percent, and the relevanttax rate is 21 percent. a.The unit sales, variable cost, and fixed cost projections givenabove are probably accurate to within ±10 percent. What are theupper and lower bounds for these projections? What is the base-caseNPV? What are the best-case and worst-case scenarios?b.Calculate the sensitivity of your base-case NPV to changes infixed costs. (A negative amount should be indicated by aminus sign. Do not round intermediate calculations and round youranswer to 3 decimal places, e.g., 32.161.)c.What is the accounting break-even level of output for thisproject?