Question
1- Whitewater Transmissions, Inc., has the following estimates for its new gear assembly project: price = $2,000 per unit; variable costs = $780 per unit;
1- Whitewater Transmissions, Inc., has the following estimates for its new gear assembly project: price = $2,000 per unit; variable costs = $780 per unit; fixed costs = $5.6 million; quantity = 110,000 units. Suppose the company believes all of its estimates are accurate only to within 15%. What values should the company use for the four variables given here when it performs its best-case scenario analysis? What about the worst-case scenario? (Enter the answers in dollars, not millions of dollars, i.e. 1,234,567. Omit $ sign in your response.)
Scenario | Units Sales | Unit Price | Variable Cost | Fixed Costs |
Base | $ | $ | $ | |
Best | $ | $ | $ | |
Worst | $ | $ | $ | |
2- Consider a four-year project with the following information: initial fixed asset investment = $479,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $30; variable costs = $22; fixed costs = $199,000; quantity sold = 88,000 units; tax rate = 34%.
How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)
OCF/Q $
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