Problem $10-8$ Sensitivity Analysis $($LO$3)$

Emperor's Clothes Fashions can invest $$5$ million in a new plant for producing invisible makeup. The plant has an expected life $5$

years, and expected sales are $6$ million jars of makeup a year. Fixed costs are $$2\mathrm{.}8$ million a year, and variable costs are $$1\mathrm{.}40$ per jar.

The product will be priced at $$3\mathrm{.}00$ per jar. The plant will be depreciated straight$-$line over $5$ years to a salvage value of zero. The

opportunity cost of capital is $14\%,$ and the tax rate is $30\%.$

a$.$ What is project NPV under these base$-$case assumptions?

Note: Do not round intermediate calculations. Enter your answer in millions, rounded to $2$ decimal places.

b$.$ What is NPV if variable costs turn out to be $$2\mathrm{.}10$ per jar?

Note: Do not round intermediate calculations. Enter your answer in millions, rounded to $2$ decimal places.

c$.$ What is NPV if fixed costs turn out to be $$2\mathrm{.}6$ million per year?

Note: Do not round intermediate calculations. Enter your answer in millions, rounded to $2$ decimal places.

d$.$ At what price per jar would the project's NPV equal zero?

Note: Enter your answer in dollars, not in millions. Do not round intermediate calculations. Round your answer to $2$ decimal

places.