Question: PLEASE PUT EXCEL FORMULAS IF YOU CAN ! ! ! ! ! ! ! ! Thank You :) We are evaluating a project that costs
PLEASE PUT EXCEL FORMULAS IF YOU CAN Thank You :)
We are evaluating a project that costs $ has an eightyear life, and has no salvage value.
Assume that depreciation is straightline to zero over the life of the project. Sales are projected at
units per year. Price per unit is $ variable cost per unit is $ and fixed costs are $
per year. The tax rate is percent, and we require a return of percent on this project.
a Calculate the accounting breakeven point. What is the degree of operating leverage at the
accounting breakeven point?
b Calculate the basecase cash flow and NPV What is the sensitivity of NPV to changes in the quantity
sold? Explain what your answer tells you about a 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 $ decrease in estimated variable costs.
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