We are evaluating a project that costs $924,000, has an eight-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 75,000 units per year. Price per unit is $46, variable cost per unit is $31, and fixed costs are $825,000 per year. The tax rate is 35 percent, and we require a 15 percent return on this project.

A-1. Calculate the accounting break-even point.

Break even point

_______ Units

A-2. What is the degree of operating leverage at the accounting break-even point? (Round your answer to 3 decimal places. (e.g., 32.161))

DOL

________?

B-1. Calculate the base-case cash flow and NPV. (Round your NPV answers to 2 decimal places. (e.g., 32.16))

Cash flow	$________
NPV/Q	$________

B-2. What is the sensitivity of NPV to changes in the sales figure? (Do not round intermediate calculations and round your final answer to 3 decimal places. (e.g., 32.161))

NPV/Q

$_________

C. What is the sensitivity of OCF to changes in the variable cost figure? (Negative amount should be indicated by a minus sign.)

OCF/VC

$___________