4. We are evaluating a project that costs $896,000, has eight year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 100,000 units per year. Price per unit is $38, variable cost per unit is $25, and fixed costs are $900,000 per year. The tax rate is 35%, and we require a 15% return on this project. a. What is the EBIT break even quantity? (77,847) b. What is the NPV when the firm produces 100,000 units? ($446,606.60) c. What is the sensitivity of the NPV (i.e. the percent change in NPV) to a 500-unit decline in sales? (NPV = $427,647.66, -4.25%)

5. In the previous problem, suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within + or 10%. Calculate the best-case and worst-case NPV. ($3,109,607.54; -$1,848,882.72)

Answers are provided in brackets, please show solutions as to how answers were derived. Thanks.