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Fresh Healthcare Inc. is considering the following project. The project requires an initial investment of $20 million. The corporate tax rate is 21%, and
Fresh Healthcare Inc. is considering the following project. The project requires an initial investment of $20 million. The corporate tax rate is 21%, and the firm's required rate of return is 10%. Assume that the firm uses the straight-line depreciation method. Price per unit: $1,550 Variable cost per unit: $750 Annual fixed costs: $520,000 In this question, the sign (+/-) of your answer(s) matters. Duration: 12 years Number of units: 5,000 (per year) a) What is the annual operating cash flow (OCF) of the project? b) What is the net present value (NPV) of the project? c) What is the sensitivity to the change in the variable cost per unit in the NPV?
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Step: 1
To calculate the annual operating cash flow OCF of the project we need to calculate the following components Revenue Number of units Price per unit 50...Get Instant Access to Expert-Tailored Solutions
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