Project evaluation (20 marks) Consider a 4 year project which requires an initial cash outlay of $45 000, has an opportunity cost of capital of 10 p a and has had the following variable estimates Variable Estimates Selling price (per unit) $65 Variable cost (per unit) $45 Fixed operating cost $5,000 Sales volume 1000 You are required to conduct additional analyses as follows (a) Calculate the NPV of this project (6 marks) (b) Conduct sensitivity analysis regarding the selling price if the estimate of selling price in pessimistic scenario is $55 and that in optimistic scenario is $75 (7 marks) (c) Calculate the NPV break even point of sales volume (7 marks)

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Question: Project evaluation (20 marks) Consider a 4-year project which requires an initial cash outlay of $45 000, has an opportunity cost of capital of 10%

Project evaluation (20 marks) Consider a 4-year project which requires an initial cash outlay of $45 000, has an opportunity cost of capital of 10% p.a. and has had the following variable estimates

Variable	Estimates
Selling price (per unit)	$65
Variable cost (per unit)	$45
Fixed operating cost	$5,000
Sales volume	1000

You are required to conduct additional analyses as follows: (a) Calculate the NPV of this project (6 marks) (b) Conduct sensitivity analysis regarding the selling price if the estimate of selling price in pessimistic scenario is $55 and that in optimistic scenario is $75 (7 marks) (c) Calculate the NPV break-even point of sales volume (7 marks)

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