2. Perform a sensitivity analysis on the unit sales, salvage value, and WACC for the project. Assume that each of these variables deviates from its base-case, or expected value by plus or minus 10%, 20%, and 30%. Calculate NPV for each case (21 NPV in total: 7 NPV for change in unit sale; 7 NPV for change in salvage value; and 7 NPV for change in WACC), then draw a graph with three lines (one for Unit Sales, one for Salvage Value, and one for WACC, all three lines in the same graph . At the end, perform a sensitivity analysis for the project (what you have seen from your graph, what conclusion you can make?).

				Years
		0	1	2	3	4
I. Investment Outlays
Equipment cost		$ 450,000
Shipping and Installation		38,000
CAPEX		$ 488,000
Increase in inventory		$ 40,000
Increase in Accounts Payable		10,000
NOWC		$ 30,000
II. Project Operating Cash Flows
Unit sales			195,000	195,000	195,000	195,000
Price per unit			$1.60	$1.60	$1.60	$1.60
Total revenues			$ 312,000	$ 312,000	$ 312,000	$312,000
Operating costs (w/o deprn)			124,800	124,800	124,800	124,800
Depreciation			195,200	146,400	97,600	48,800
Total costs			$320,000	$271,200	$ 222,400	$ 173,600
EBIT (Operating income)			$ (8,000)	$ 40,800	$ 89,600	$ 138,400
Taxes on operating income			(1,840)	9,384	20,608	31,832
EBIT (1 T) = After Tax operating income			$ (6,160)	$ 31,416	$68,992	$ 106,568
Add back depreciation			195,200	146,400	97,600	48,800
EBIT (1 T) + DEP		$0	$189,040	$ 177,816	$ 166,592	$155,368
III. Project Termination Cash Flows
Salvage value						$45,000
Tax on salvage value						(10,350)
After-tax salvage value						34,650
NOWC = Recovery of NOWC						$30,000
Project Free Cash Flows =		($518,000)	$ 189,040	$ 177,816	$ 166,592	$220,018
EBIT(1-T) + DEP - CAPEX - NOWC			$ (328,960)	$ (151,144)	$ 15,488	$ 235,466
	NPV = 50,941.85
	IRR = 16.508%
	MIRR = 14.66%
	Payback = 2.907 Years
	Discounted Payback = 3.636 years