Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider a three-year project with the following information: initial fixed asset investment = $850,000; straight-line depreciation to zero over the five-year life; zero salvage value;

Consider a three-year project with the following information: initial fixed asset investment = $850,000; straight-line depreciation to zero over the five-year life; zero salvage value; price = $33.25; variable costs = $22.15; fixed costs = $206,000; quantity sold = 92,000 units; tax rate = 34 percent.

Required:

What is the OCF at the base-case quantity sold? (Do not round intermediate calculations. Round your answer to the nearest whole number (e.g., 32).)

OCF $

What is the OCF at 93,000 units sold? (Do not round intermediate calculations. Round your answer to the nearest whole number (e.g., 32).)

OCF $

How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations. Round your answer as directed but do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

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

Mastering Islamic Finance

Authors: Faizal Karbani

1st Edition

1292001445, 978-1292001449

More Books

Students also viewed these Finance questions

Question

How is this person feeling about the situation?

Answered: 1 week ago