You are considering a new product launch. The product will cost $1,700,000, have a 4-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 140 units per year; price per unit will be $22,000 variable cost per unit will be $12,500, and fixed cost will be $490,000 per year. The required return on the project is 10 percent, and the relevant tax rate is 32%. The unit sales, variable cost, and fixed cost projections given are probably accurate to with +-10%.

• What are the upper and lower bounds for these projections?
• What is the bas NPV?
• What are the best and worse case scenarios?
• Calculate the sensitivity of your base-case NPV to changes in fixed costs.
• What is the accounting break even level of output for this project?