We are evaluating a project that costs $1,080,000, has a ten-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 52,000 units per year. Price per unit is $48, variable cost per unit is $27, and fixed costs are $756,000 per year. The tax rate is 25 percent, and we require a return of 15 percent on this project.

The base case cash flow for the project is $279,000 giving a NPV of $320,236.45. You are concerned about how variations in the sales quantity will impact your final decision on the project so you reduced the sales quantity by 500 units to 51,500 and reestimated the cash flow to be $271,125 and the NPV to be $280,713.65.

How sensitive is the NPV to changes in the the units of sale?