iensitivity Analysis Consider a project with the following information: Initial fixed asset investment =$655,000; straight-line depreciation o zero over the four-year life; zero salvage value; price =$28; variable costs =$16; fixed costs =$245,000; quantity sold =61,000 units; tax ate =21 percent. How sensitive is OCF to changes in quantity sold? roject Analysis You are considering a new product launch. The project will cost $1.675 million, have a four-year life, and have no salvage 'alue; depreciation is straight-line to zero. Sales are projected at 195 units per year; price per unit will be $16,300; variable cost per unit will e $9,400; and fixed costs will be $550,000 per year. The required return on the project is 12 percent and the relevant tax rate is 21 percent. 1. Based on your experience, you think the unit sales, variable cost, and fixed cost projections given here are probably accurate to within 10 percent. What are the upper and lower bounds for these projections? What is the base-case NPV? What are the best-case and worstcase scenarios? 2. Evaluate the sensitivity of your base-case NPV to changes in fixed costs. 3. What is the accounting break-even level of output for this project