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A 5-year project is expected to generate annual sales of 8,800 units at a price of $75 per unit and a variable cost of $46
A 5-year project is expected to generate annual sales of 8,800 units at a price of $75 per unit and a variable cost of $46 per unit. The equipment necessary for the project will cost $309,000 and will be depreciated on a straight-line basis over the life of the project. Fixed costs are $185,000 per year and the tax rate is 21 percent. How sensitive is the operating cash flow to a $1 change in the per unit sales price?
A. $3,254 B. $4,752 C. $6,952 D. $4,003 E. $3,629
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