Consider a project with a life of 8 years with the following information: initial fixed asset investment = $340,000; straight-line depreciation to zero over the 8-year life; zero salvage value; price = $33; variable costs = $20; fixed costs = $136,000; quantity sold = 82,960 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].

Multiple Choice

• $9.88

• $12.75

• $0.10

• $11.26

• $7.01