Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider a four-year project with the following information: initial fixed asset investment = $491,731; 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 = $491,731; straight-line depreciation to zero over the four-year life; zero salvage value; price = $33; variable costs = $24; fixed costs = $195,602; quantity sold = 79,813 units; tax rate = 36 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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Social Finance Shadow Banking During The Global Financial Crisis

Authors: Neil Shenai

1st Edition

3030082318, 978-3030082314

More Books

Students also viewed these Finance questions