Consider a five-year project with the following information: initial fixed asset investment = $1,060,000; straight-line depreciation to zero over the ten-year life; zero salvage value; price = $42.50/unit; variable costs = $19.70/unit; fixed costs = $412,000 per year; quantity sold = 200,000 units per year; tax rate = 25%. How sensitive is OCF to changes in quantity sold (i.e., what is the change in OCF given an increase of one unit sold in a year)?

 

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Heres how we can calculate it Contribution margin per unit Cont... View the full answer