North State Manufacturing is considering a contract for a project to supply Detroit Automotive Solutions with 30,000 tons of machine screws annually for automobile production. North State Manufacturing will need an initial $4,500,000 investment in threading equipment to get the project started; the project will last for six years. The accounting department estimates that annual fixed costs will be $925,000 and that variable costs should be $280 per ton; accounting will depreciate the initial fixed asset investment straight-line to zero over the six-year project life. It also estimates a salvage value of $500,000 after dismantling costs. The initial investment and salvage value are accurate within +/- 8% of the initial projections. The marketing department estimates that the automakers will approve the contract at a selling price of $400 per ton. The engineering department estimates that North State Manufacturing will need an initial net working capital investment of $500,000, but management expects to recover their net working capital in the terminal year of the project. Consider, the units produced, sales price, variable costs, and fixed costs to be accurate within +/- 10% of the projections. Also consider, that the North State Manufacturing is offered a similar contract with Automoville, Inc. that has an expected net present value of $850,000, a payback period of 4.2 years, and IRR of 25%, but it comes with a non-compete clause that will not allow you to pursue the contract with Detroit Automotive Solutions. North State Manufacturing requires a return of 13.75 percent and face a marginal tax rate of 30 percent on this project. You are a Financial Analyst in the Corporate Finance Division and have been tasked by North State Manufacturings VP-Capital Projects, Cynthia Barlow, to evaluate this project. The VP would like to know the following in an executive summary: What is the base case scenario NPV of the Detroit Automotive Solutions contract? What is the IRR for the base-case scenario? What is the payback period for the base-case scenario of the Detroit Contract? What is the sensitivity of the project NPV to changes in the quantity supplied NPV/Q? What is the sensitivity of the project NPV to changes in the variable costs NPV/VC? What is the sensitivity of the project NPV to changes in the fixed costs NPV/FC? Which of these items have the greatest impact on the projects NPV?