You are considering a new product launch. The project will cost $$2,350,000,$ have a four$-$year life, and have no salvage value; depreciation is straight$-$line to zero. Sales are projected at $150$ units per year; price per unit will be $$31,000,$ variable cost per unit will be $$19,000,$ and fixed costs will be $$620,000$ per year. The required return on the project is $14$ percent, and the relevant tax rate is $24$ percent.

a$-1.$ The unit sales, variable cost, and fixed cost projections given above are probably accurate to within $\backslash$pm $10$ percent. What are the upper and lower bounds for these projections? What is the base$-$case NPV$?$ What are the best$-$case and worst$-$case scenarios? $($Do not round intermediate calculations and round your answers to the nearest whole number, e$.$g$.,32.)$

a$-2.$ What is the base$-$case NPV$?$ What are the best$-$case and worst$-$case scenarios? $($A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

b$.$ Calculate the sensitivity of your base$-$case NPV to changes in fixed costs. $($A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to $3$ decimal places, e$.$g$.,32\mathrm{.}161.)$

c$.$ What is the accounting break$-$even level of output for this project? $($Do not round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$Problem $9-13$ Project Analysis

You are considering a new product launch. The project will cost $$2,350,000,$ have a four$-$

year life, and have no salvage value; depreciation is straight$-$line to zero. Sales are

projected at $150$ units per year; price per unit will be $$31,000,$ variable cost per unit will

be $$19,000,$ and fixed costs will be $$620,000$ per year. The required return on the

project is $14$ percent, and the relevant tax rate is $24$ percent.

a$-1.$ The unit sales, variable cost, and fixed cost projections given above are probably

accurate to within $+-10$ percent. What are the upper and lower bounds for these

projections? What is the base$-$case NPV$?$ What are the best$-$case and worst$-$case

scenarios? $($Do not round intermediate calculations and round your answers to

the nearest whole number, e$.$g$.,32.)$

a$-2.$ What is the base$-$case NPV$?$ What are the best$-$case and worst$-$case scenarios? $($A

negative answer should be indicated by a minus sign. Do not round intermediate

calculations and round your answers to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

b$.$ Calculate the sensitivity of your base$-$case NPV to changes in fixed costs. $($A

negative answer should be indicated by a minus sign. Do not round intermediate

calculations and round your answer to $3$ decimal places, e$.$g$.,32\mathrm{.}161.)$

c$.$ What is the accounting break$-$even level of output for this project? $($Do not round

intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,$

$32\mathrm{.}16.)$