View previous attempt 2 The most likely outcomes for a particular project are estimated as follows: 16 points Unit price: Variable cost: Pixed cost: Expected sales 50 30 $500,000 49,000 units per year eBook However, you recognize that some of these estimates are subject to error. Suppose that each variable may turn out to be either 10% higher or 10% lower than the initial estimate. The project will last for 10 years and requires an initial investment of $2.2 million, which will be depreciated straight line over the project life to a final value of zero. The firm's tax rate is 30% and the required rate of return is 12%. References a. What is project NPV in the best-case scenario, that is, assuming all variables take on the best possible value? (A negative amount should be indicated by a minus sign. Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to the nearest dollar amount.) NPV (640,600) b. What is project NPV in the worst-case scenario? (A negative amount should be indicated by a minus sign. Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to the nearest dollar amount.) NPV 652 685 5 Modern Artifacts can produce keepsakes that will be sold for $50 each. Nondepreciation fixed costs are $700 per year, and variable costs are $40 per unit. The initial investment of $2,100 will be depreciated straight-line over its useful life of 3 years to a final value of zero, and the discount rate is 16%. 16 points a. What is the degree of operating leverage of Modern Artifacts when sales are $7,750? (Do not round intermediate calculations Round your answer to 2 decimal places.) Degree of operating leverage 1.82 eBook References b. What is the degree of operating leverage when sales are $13,500? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Degree of operating leverage 1.35 c. Why is operating leverage different at these two levels of sales? Degree of operating leverage is lower When profits are higher