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Consider a project with a life of 10 years with the following information: initial fixed asset investment = $340,000; straight-line depreciation to zero over the
Consider a project with a life of 10 years with the following information: initial fixed asset investment = $340,000; straight-line depreciation to zero over the 10-year life; zero salvage value; price = $31; variable costs = $14; fixed costs = $193,800; quantity sold = 85,272 units; tax rate = 24 percent. How sensitive is OCF to changes in quantity sold? [Calculate OCF with data given, and also for an arbitrary quantity, say 1000 units more. Sensitivity is (OCF2 - OCF1)/(Q2 - Q1). This is OCF per unit change in Q]
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