Question: Consider a three-year project with the following information: Initial fixed asset investment = $755,000; straight-line depreciation to zero over the 6-year life; zero salvage value;

Consider a three-year project with the following information: Initial fixed asset investment = $755,000; straight-line depreciation to zero over the 6-year life; zero salvage value; price = $40.11; variable costs = $28.85; fixed costs = $359,000; quantity sold = 96,000 units; tax rate = 23 percent.

What is the OCF at the base-case quantity sold?

What is the OCF at 97,000 units sold?

How sensitive is OCF to changes in quantity sold?

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