Question
Consider a four-year project with the following information: initial fixed asset investment = $473,891; 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 = $473,891; straight-line depreciation to zero over the four-year life; zero salvage value; price = $32; variable costs = $23; fixed costs = $180,923; quantity sold = 79,494 units; tax rate = 37 percent. Calculate the sensitivity of the OCF to changes in the quantity sold. [Hint: Think of this as, "How much does OCF change if we can sell one more unit each year?"] (Do not round intermediate calculations and round your final answer to 2 decimal places. Omit the "$" sign and commas in your response. For example, $1.2345 should be entered as 1.23.)
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