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Ironlove Inc. considers a project to supply a car manufacturer with 130,000 tons of steel plates annually for five years. It requires an initial investment

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Ironlove Inc. considers a project to supply a car manufacturer with 130,000 tons of steel plates annually for five years. It requires an initial investment of 60 million dollars in steel plate production machinery. The variable cost of the production is $450 per ton. The overhead cost will be 15 million dollars a year, and the company estimates the price of the steel plates at $1000 per ton. To run this project, Ironlove needs to invest 10 million dollars in the net working capital at time zero. The machinery belongs to Class 6, with a CCA rate of 20%. The company estimates that it can sell the machinery at a salvage value equal to one-fourth of the original cost (which is equal to 15 million dollars). Assume the company requires a 12% rate of return, and the tax rate is 35%. d) ppose you are not confident about the car manufacturer's actual steel plates requirement. What is the sensitivity of the project OCF to changes in the quantity supplied? What about the sensitivity of NPV to changes in quantity supplied? Given the sensitivity number you calculated, what is the minimum level of output below which you wouldn't want to operate

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