Question: i need the three blank cells solved We are evaluating a project that costs $845,000, has an eight-year life, and has no salvage value. Assume

We are evaluating a project that costs $845,000, has an eight-year life, and has no salvage value. Assume that depreciabion is straight-line to zero over the life of the project. Sales ra projected at $1,000 units per vear. Price per unit is $53, variable cost per unit is $27, and fixed costs are $950,000 per year. The tax rate is 22 percent, and we require a return of 10 percent on this project. a. Calculate the accounting break-even point. What is the degree of operating leverage at the accounting break-even point? b. Calculate the base-case cash flow and NPV. What is the sensitivity of NPV to changes in the quantity sold? Explain what your answer tells you about a 500 -unit decrease in the quantity sold. c. What is the sensitivity of OCF to changes in the variable cost figure? Explain what your answer tells you about a $1 decrease in estimated variable costs. input area: (Use ceils AE to C17 from the given information to complete this queition. You must use the bulit-in Excel function answer this question. The ocF must be calculated using the depreciation tax shield approoch.) 22 Output area: o. Depreciation per year Accounting break-even DOL b. Base OCF Base NPV OCF at new quantity NPV at new quantity DNPV/DQ Change in NPV for given quantity change c. OCF DOCF/DVC Change in NPV for given VC change We are evaluating a project that costs $845,000, has an eight-year life, and has no salvage value. Assume that depreciabion is straight-line to zero over the life of the project. Sales ra projected at $1,000 units per vear. Price per unit is $53, variable cost per unit is $27, and fixed costs are $950,000 per year. The tax rate is 22 percent, and we require a return of 10 percent on this project. a. Calculate the accounting break-even point. What is the degree of operating leverage at the accounting break-even point? b. Calculate the base-case cash flow and NPV. What is the sensitivity of NPV to changes in the quantity sold? Explain what your answer tells you about a 500 -unit decrease in the quantity sold. c. What is the sensitivity of OCF to changes in the variable cost figure? Explain what your answer tells you about a $1 decrease in estimated variable costs. input area: (Use ceils AE to C17 from the given information to complete this queition. You must use the bulit-in Excel function answer this question. The ocF must be calculated using the depreciation tax shield approoch.) 22 Output area: o. Depreciation per year Accounting break-even DOL b. Base OCF Base NPV OCF at new quantity NPV at new quantity DNPV/DQ Change in NPV for given quantity change c. OCF DOCF/DVC Change in NPV for given VC change
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