We are evaluating a project that costs $520,000, 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 73,000 units per year. price per unit is $50, variable cost per unit is $30, and fixed costs are $832,000 per year. the tax rate is 35 percent, and we require a return of 10 percent on this project.

a. calculate the break even point.

b-1. calculate the base case cash flow and npv rounding to 2 decimal places.

b-2. what is the sensitivity of npv to changes in the sales figure? (npv/q)

b-3. calculate the change in npv if sales were to drop by 500 units.

c. what is the sensitivity of ocf to changes in the variable cost figure? (ocf/vc)

P8-4b dropping unfavorable division based on the following analysis of last year's operations of groves, inc., a financial vice president of the company believes that the firm's total net income could be increased by $160,000 if its design division were discontinued. (amounts are given in the thousands of dollars.) required provide answers for each of the following independent situations: a. assuming that total fixed costs and expenses would not be affected by discontinuing the design division, prepare an analysis showing why you agree or disagree with the vice president. b. assume that the discontinuance of the design division will enable the company to avoid 30% of the fixed portion of cost of services and 40% of the fixed operating expenses allocated to the design division. calculate the resulting effect on net income. c. assume that in addition to the cost avoidance in requirement (b), the capacity released by discontinuance of the design division can be used to provide 6,000 new services that would have a variable cost per service of $60 and would require additional fixed costs totaling $68,000. at what unit price must the new service be sold if groves is to increase its total net income by $180,000?