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Consider a four-year project with the following information: initial fixed asset investment = $493996; straight-line depreciation to zero over the four-year life; zero salvage value;
Consider a four-year project with the following information: initial fixed asset investment = $493996; straight-line depreciation to zero over the four-year life; zero salvage value; price = $33; variable costs = $25; fixed costs = $194724; quantity sold = 78884 units; tax rate = 36 percent. Calculate the sensitivity of the OCF to changes in the quantity sold.
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