Question: We are evaluating a project that costs $2,100,000, has a 7-year life, and has no salvage value. Assume that depreclation Is straight-line to zero over

 We are evaluating a project that costs $2,100,000, has a 7-year

We are evaluating a project that costs $2,100,000, has a 7-year life, and has no salvage value. Assume that depreclation Is straight-line to zero over the life of the project. Sales are projected at 98,600 units per year. Price per unit is $37.79, varlable cost per unit is $23.90, and fixed costs are $857,000 per year. The tax rate is 24 percent, and we require a return of 10 percent on this project. a. Calculate the base-case operating cash flow and NPV. (Do not round Intermedlate calculations and round your answers to 2 declmal places, e.g., 32.16.) b. What is the sensitlvity of NPV to changes in the sales figure? (Do not round Intermedlate calculations and round your answer to 3 decimal places, e.g., 32.161.) c. If there Is a 500-unit decrease In projected sales, how much would the NPV change? (A negatlve answer should be Indlcated by a minus sign. Do not round Intermedlate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What is the sensitlvity of OCF to changes in the varlable cost figure? (A negatlve answer should be Indlcated by a minus sign. Do not round Intermedlate calculations and round your answer to the nearest whole number, e.g., 32.) e. If there Is a $1 decrease In estimated varlable costs, how much would the OCF change? (Do not round Intermedlate calculations and round your answer to the nearest whole number, e.g., 32.) We are evaluating a project that costs $2,100,000, has a 7-year life, and has no salvage value. Assume that depreclation Is straight-line to zero over the life of the project. Sales are projected at 98,600 units per year. Price per unit is $37.79, varlable cost per unit is $23.90, and fixed costs are $857,000 per year. The tax rate is 24 percent, and we require a return of 10 percent on this project. a. Calculate the base-case operating cash flow and NPV. (Do not round Intermedlate calculations and round your answers to 2 declmal places, e.g., 32.16.) b. What is the sensitlvity of NPV to changes in the sales figure? (Do not round Intermedlate calculations and round your answer to 3 decimal places, e.g., 32.161.) c. If there Is a 500-unit decrease In projected sales, how much would the NPV change? (A negatlve answer should be Indlcated by a minus sign. Do not round Intermedlate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What is the sensitlvity of OCF to changes in the varlable cost figure? (A negatlve answer should be Indlcated by a minus sign. Do not round Intermedlate calculations and round your answer to the nearest whole number, e.g., 32.) e. If there Is a $1 decrease In estimated varlable costs, how much would the OCF change? (Do not round Intermedlate calculations and round your answer to the nearest whole number, e.g., 32.)

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