Problem $4$: Sensitive Projects

A firm with required rate of return $($discount rate$)16\%$ is evaluating a $10-$year investment project that requires an initial investment of $$300,000$ that can be depreciated linearly to zero during its lifespan. The project will introduce a new product and the firm expects to sell $10,000$ units annually at the price of $$30$ each. The variable cost is $$10$ per unit, the fixed cost is $$50,000$ per year and the tax rate is $20\%.$

Find the NPV of the project. Should it be accepted?

Do a sensitivity analysis on the price and units sold by estimating the NPV if the two variables decrease by $20\%(2$ separate cases$).$ Which variable is more important? Why?

Find the break$-$even discount rate $($required rate of return$).$

Find the break$-$even value for units sold.

Find the break$-$even value for price.