Consider a project with a life of 9 years with the following information: initial fixed asset investment = $410,000; straight-line depreciation to zero over the 9-year life; zero salvage value; price = $26; variable costs = $19; fixed costs = $155,800; quantity sold = 88,806 units; tax rate = 25 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

• $0.19

• $6.77

• $5.25

• $5.98

• $3.73