We are evaluating a project that costs $$858,000,$ has a life of $11$ years, and has no salvage value. Assume that depreciation is straight$-$line to zero over the life of the project. Sales are projected at $111,000$ units per year. Price per unit is $$40,$ variable cost per unit is $$26,$ and fixed costs are $$864,864$ per year. The tax rate is $21$ percent, and we require a return of $18$ percent on this project.

$1$a$.$ Calculate the accounting break$-$even point.

$1$b$.$ What is the degree of operating leverage at the accounting break$-$even point?

$2$a$.$ Calculate the base$-$case cash flow.

$2$b$.$ Calculate the NPV$.$

$2$c$.$ What is the sensitivity of NPV to changes in the quantity sold?

$2$d$.$ What your answer tells you about a $500-$unit decrease in the quantity sold?

$3$a$.$ What is the sensitivity of OCF to changes in the variable cost figure?

$3$b$.$ How much will OCF change if variable costs decrease by $$1?$