A project with a five year life requires an initial investment of $120,000 and generates a net present value (NPV) of $50,000 at a discount rate of 10% per annum.

The project cash flows are as follows.

Variable material cost-30,000

Variable labour cost-10,000

Incremental fixed cost-5,000

The costs and activity levels are expected to remain the same for each year of the project,Ignore taxation and inflation.What is the sensitivity of the investment decision to changes in the variable costs?