Question: We are evaluating a project that costs 2 , 0 0 0 , 0 0 0 0 , has a 5 - year life, and

We are evaluating a project that costs 2,000,0000, has a 5-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 70,000 units per year. The price per unit is $50, the variable cost per unit is $28, and fixed costs are$500,000 per year. The tax rate is 23 percent, and we require a return of 15 percent on this project.What is the sensitivity of OCF to changes in the variable cost figure?

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