We are evaluating a project that costs $$989,000,$ has an $13-y$ ear life, and has no salvage value. Assume that depreciation is straight$-$line to zero over the life of the project. Sales are projected at $106,000$ units per year. Price per unit is $$43,$ variable cost per unit is $$22.$ and fixed costs are $$1,005,802$ per year. The tax rate is $31$ percent, and we require a $20$ percent return on this project.

Requirement $1$: Break$-$Even

$($o$)$Calculate the accounting break$-$even point. $($Do not round your Intermedlate celculetions.$)$

$($b$)$ What is the degree of operating leverage at the accounting bireak$-$ewen point? $($Do not round your Intermedlete calculatens:

Requlrement $2$: Base$-$Case & NPV Sensitivity

$($o$)$Calculate the base$-$case operating cash flow. $($Do not nound your Intermedhipe caleulatlons.$)$

$($c$)$ What is the sensitivityielasticity of NPW the changes in the salesthure?

Recall from your economics class that an elattinty measures berentage change in by $1$ percent calculate the new NPW$.$ and then calculate the pererntege change in the NFV$.($Do not round your intermedlate celleulstlorth$)$

$2\mathrm{.}375$

$-$$$354,369$

squlrement $3$: Sensitivity of OCF

In addition to NPV$,$ we can calculate the sensitivity of cther things, such as OCF. What is the sensitivity of base$-$case OCF to changes in the variable cost? Estimate the calculetlont.$)$

$-1\mathrm{.}86$

in the variable costs? $($Do rol round your Intsermedlete celleullethent$)$

$$-978$