# LH Corp is evaluating a project that costs $724,000, has an 8-year life, and has no salvage value. Assume that depreciation is straight-line to zero…

LH Corp is evaluating a project that costs $724,000, has an 8-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life the project. Sales are projected at 75,000 units per year with price per unit is $39. Variable cost per unit is $23. Fixed costs are $850,000 per year. The tax rate is 35%, and the discount rate on this project is 15%. a). Calculate the accounting break-even point. b). Calculate the base-case cash flow and NPV. c). What is the sensitivity of NPV to changes in the sales figure? IF Sales dropped by 400 units, what is the corresponding change of NPV? d). What is the sensitivity of operating cash flow to changes in the variable cost figure? Based on your calculation, how much is the change of operating cash flow if variable costs increased by $2 per unit? e). Suppose the projections given above for price, quantity, variable costs, and fixed costs are all accurate to within ± 10%. Calculate the best-case and worst-case NPV figures.