A video rental store will cost $650,000 to open. Assuming annual sales of $1 million, variable costs of 35%, fixed costs od $300,000, depreciation of $100,000, and a tax rate of 35%, calculate the NPV of the project over a 10-year horizon (assume no inflation or salvage value) with a 12% cost of capital. (6 points)

Conduct a sensitivity analysis by allowing investment, sales, variable costs, and fixed costs to vary by PLUS 10% and MINUS 10% from their original estimates. Which variable most impacts profitabilty? (4 points)

Construct a work sheet to show your results.