Notably, the project has a negative NPV while the Internal rate of return (IRR) is way
below the expected rate of return. The project is therefore unfavorable and unviable to invest in
and should not be implemented.
Part 2A
Considering a higher level of the sales of the current level by 50%, the NPV improves to
$260,624.27 and the IRR to 26%. Considerably, the project is viable to invest in since it proves
to be profitable.
Part 2B
Considering a higher level of the sales of the current level by 75%, the NPV improves to
$465,862.79 and the IRR to 36%. Considerably, the project is viable to invest in since it proves
to be profitable.
Part 2C
Considering a lower level of the sales of the current level by 50%, the NPV worsens to
($560,329) and the IRR to -21%. Considerably, the project is viable to invest in since it proves to
be profitable.
Part 2D
Considering a lower level of the sales of the current level by 75%, the NPV worsens to
($765,568) and the IRR to -41%. Considerably, the project is unviable to invest in since it proves
to be unprofitable.
Part 3
The breakeven price of the equipment is found to be the present value of all the cash
streams where the NPV is zero. The breakeven price of the equipment is $778,213.32.
