Consider a four year project with the following information Initial fixed asset investment $480,000 straight line depreciation to zero over the four year life zero salvage value price $37 variable costs $23 fixed costs $195,000 quantity sold 90,000 units tax rate 34 percent How sensitive is OCF to ...

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Consider a four-year project with the following information: Initial fixed asset investment = $480,000; straight-line depreciation to

Question:

Consider a four-year project with the following information: Initial fixed asset investment = $480,000; straight-line depreciation to zero over the four-year life; zero ; price = $37; variable costs = $23; fixed costs = $195,000; quantity sold = 90,000 units; tax rate = 34 percent. How sensitive is OCF to changes in quantity sold?

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...