Question: Problem Sensitivity Analysis and Break-Even Point We are evaluating a project that costs $1,180.000. has a ten-year life, and has no salvage value. Assume that
Problem Sensitivity Analysis and Break-Even Point We are evaluating a project that costs $1,180.000. has a ten-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 66,000 units per ear. Price per unit is S45, variable cost per unit is S25, and fixed costs are S750.000 per year. The tax rate 35 percent, and we require a return of 15 percent on this project. a. Calculate the accounting break-even point (Do not round intermediate calculations and round your answer to the nearest whole number, eg., 32) 43,400 units b 1 Calculate the base-case cash sow and NPV. (Do not round intermediate calculations and round your NPV answer to 2 decimal places, e.g. 32.16) Cash flow 411,800 Sl 886,728 b2 What the of NPv changes in the sales sgure? Do not round intermediate calculations and round your answer to 3 decimal places, e-g 32.161) c. What is the sensitivity of ocF to changes in the variable cost sigure? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.) References eBook & Resources Search the web and Windows
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