Question: Consider a three-year project with the following information: initial fixed asset investment = $375,000; 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 = $375,000; straight-line depreciation to zero over the three-year life; zero salvage value; price = $28.20; unit variable cost = $13.50; fixed costs = $300,000; quantity sold = 30,000 units; tax rate = 25%. How sensitive is OCF to changes in quantity sold (i.e., the change in OCF given one unit increase in quantity)?
| $11.48 | ||
| $11.25 | ||
| $11.02 | ||
| $10.77 | ||
| $10.54 |
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