ABC Company is working to launch a new product. The investment amount for the project is $ 15 million. The facilities including new equipment could be used for 15 years. The scrap value is assumed to be zero and straight-line depreciation is assumed. Annual fixed costs are predicted to be as $ 3 million and variable costs as approximately 70% of the sales revenue. Tax rate is 30% and opportunity cost of investment is 12%. Perform a sensitivity analysis to see how the profitability of the project will be affected by the annual sales volume Calculate the NPV values for two cases: high demand (revenue of $24 million) and low demand (revenue of $18 million).
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