Question
A 7-year project is expected to generate annual sales of 20,000 units at a price of $67.50 per unit and a variable cost of $40.00
A 7-year project is expected to generate annual sales of 20,000 units at a price of $67.50 per unit and a variable cost of $40.00 per unit. The equipment necessary for the project will cost $280,000 and will be depreciated on a straight-line basis over the life of the project. Fixed costs are $250,000 per year and the tax rate is 35.00 percent. How sensitive is the operating cash flow to a $1 change in the per unit sales price? Answer in the form of a percentage change from the base case, e.g., 7.25% change in operating cash flow, and enter your answer as a whole number rounded to two decimal places, i.e., 7.25.
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