1. Consider a 10-year project with the following information: initial fixed asset investment = $343,000; straight-line depreciation to zero over the 10-year life; zero salvage value; price = $44; variable costs = $22; fixed costs = $126,000; quantity sold = 94,803 units; tax rate = 34%. What is the percentage sensitivity of OCF to a change in variable cost per unit?
2. We are evaluating a project that costs $983,000, has a 9-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 106,995 units per year. Price per unit is $52, variable cost per unit is $31, and fixed costs are $928,000 per year. The tax rate is 37%, and we require a 12 % return on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/-14 percent. What is the best-case NPV?
3. We are evaluating a project that costs $980,000, has a 9-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 111,094 units per year. Price per unit is $55, variable cost per unit is $38, and fixed costs are $922,000 per year. The tax rate is 37%, and we require a 12 % return on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/-14 percent. What is the worst-case NPV?
4. We are evaluating a project that costs $982,000, has a 9-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 103,110 units per year. Price per unit is $58, variable cost per unit is $26, and fixed costs are $922,000 per year. The tax rate is 37%, and we require a 12 % return on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/-14 percent. What is the accounting break-even quantity?