Question: Consider a three-year project with the following information: initial fixed asset investment = $770,000; straight-line depreciation to zero over the three-year life; zero salvage value;

Consider a three-year project with the following information: initial fixed asset investment = $770,000; straight-line depreciation to zero over the three-year life; zero salvage value; price = $34.99; variable costs = $23.16; fixed costs = $245,000; quantity sold = 94,500 units; tax rate = 40 percent. How sensitive is OCF to an increase of one unit in the quantity sold?

A)$7.10

B) $7.73

C) $8.67

D)$9.97

E) $11.83

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