# We are evaluating a project that costs \$670,000, has a five-year life

We are evaluating a project that costs \$670,000, has a five-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 59,000 units per year. Price per unit is \$44, variable cost per unit is \$24, and fixed costs are \$760,000 per year. The tax rate is 35 percent, and we require a 18 percent return on this project.

 a. Calculate the accounting break-even point. (Do not round intermediate calculations and round your final answer to nearest whole number. (e.g., 32))

 b-1 Calculate the base-case cash flow and NPV.(Do not round intermediate calculations and round your NPV answers to 2 decimal places. (e.g., 32.16))

 b-2 What is the sensitivity of NPV to changes in the sales figure?(Do not round intermediate calculations and round your final answer to 3 decimal places. (e.g., 32.161))

 c. What is the sensitivity of OCF to changes in the variable cost figure? (Do not round intermediate calculations and Negative amount should be indicated by a minus sign.)