Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider a project to supply Detroit with 40,000 tons of machine screws annually for automobile production with other details as follows: - Initial investment of

Consider a project to supply Detroit with 40,000 tons of machine screws annually for automobile production with other details as follows:

- Initial investment of $5,600,000 in threading equipment

- the project will last for 6 years.

-The accounting department estimates that annual fixed costs will be $600,000

-variable costs should be $250 per ton.

- depreciate initial investment straight-line to 0 over 6 years with salvage value of $450,000

-contract at selling price of $340 per ton

- the engineering department estimates you will need an initial net working capital investment of $560,000.

- return of 13% and marginal tax rate of 24%

(1)Whats the sensitivity of the project OCF to changes in quantity supplied?

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_2

Step: 3

blur-text-image_3

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

The Essential Nonprofit Fundraising Handbook

Authors: Michael A. Sand, Linda Lysakowski

1st Edition

1601630727, 978-1601630728

More Books

Students also viewed these Finance questions

Question

5. Identify three characteristics of the dialectical approach.

Answered: 1 week ago