Question: Consider a four-year project with the following information: initial fixed asset investment = $610,000; 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 = $610,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $48; variable costs = $36; fixed costs = $285,000; quantity sold = 112,000 units; tax rate = 25 percent.

How sensitive is OCF to changes in quantity sold?

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