Question: Consider a three-year project with the following information: initial fixed asset investment = $700,000; straight-line depreciation to zero over the 5-year life; zero salvage value;
Consider a three-year project with the following information: initial fixed asset investment = $700,000; straight-line depreciation to zero over the 5-year life; zero salvage value; price = $39.23; variable costs = $28.19; fixed costs = $326,000; quantity sold = 85,000 units; tax rate = 22 percent. What is the OCF at the base-case quantity sold? What is the OCF at 86,000 units sold? How sensitive is OCF to changes in quantity sold?

Consider a three-year project with the following information: Initial fixed asset investment = $700,000; straight-line depreciation to zero over the 5-year life; zero salvage value price = $39.23; variable costs = $28.19; fixed costs = $326,000; quantity sold = 85,000 units; tax rate = 22 percent. What is the OCF at the base-case quantity sold? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g. 32.) eBook OCF What is the OCF at 86,000 units sold? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) OCF How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
