Question: Consider a four-year project with the following information: initial fixed asset investment = $502325; straight-line depreciation to zero over the four-year life; zero salvage value;

Consider a four-year project with the following information: initial fixed asset investment = $502325; straight-line depreciation to zero over the four-year life; zero salvage value; price = $34; variable costs = $25; fixed costs = $183172; quantity sold = 79567 units; tax rate = 36 percent. Calculate the sensitivity of the OCF to changes in the quantity sold. [Hint: Think of this as, "How much does OCF change if we can sell one more unit each year?"] (Do not round intermediate calculations and round your final answer to 2 decimal places. Omit the "$" sign and commas in your response. For example, $1.2345 should be entered as 1.23.)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!