please show all work

Quiz 2: Chapter 11 Please show all work. 1. Sensitivity Analysis Consider the project where the initial cost is $200,000, and the project has a 5-year life. There is no salvage. Depreciation is straight-line (Depreciation = 200,000/5 = 40,000) Unit Sales = 6000, Price per unit=80 (Sales = 6,000 x 80) Variable cost per unit - S60 (Variable Costs = 6,000 x 60) The required return is 12%, and the tax rate is 21% What are the cash flow each year, NPV and IRR in each case, if we changed fixed costs only? Scenario Fixed Costs Base case $50,000 55.000 Best case Show all work as follows: 1. Complete the income statement for each case: Base Worst Best Sales $480,000 $480,000 5480,000 Variable Costs 360,000 360,000 360,000 Fixed Costs 50,000 55,000 45,000 Depreciation 40,000 40,000 40,000 EBIT 30,000 Taxes (21%) 6,300 Net Income 23,700 Worst case 45.000 4 OCF 5 OCF 2. Complete the project cash flow for each case: Year 0 1 2 3 OCF OCF OCF OCF Change in 0 NWC NCS -200,000 Total -200,000 0 3. Calculate the NPV and IRR for each case 2. Break-Even Analysis A project requires an initial investment of $1,000,000 and is depreciated straight-line to zero salvage over its 10-year life. The project produces items that sell for $1,000 each, with variable costs of S700 per unit. Fixed costs are $350,000 per year. What is the accounting break-even quantity? Q=(FC +DYP-v) What is the operating cash flow at accounting break-even? OCF=[PQ-VQ-FC-D]+D What is the cash break-even? O Q (FC+OCF)(P-V); where OCF-0 What is the financial break-even? I = 10% Find OCF where NPV = 0, Q = (OCF +FC)/P-v) Show all work as follows: Identify: FC - Fixed Cost D=Depreciation P Price v=variable cost per unit OCF = operating cash flow (if needed) Then compute the break-even quantities. 3. Degree of Operating Leverage A project has a fixed costs of $2,500 and variable cost per unit of $10.15. The depreciation expense is $1,100. The operating cash flow is $6,400. What is the degree of operating leverage? DOL = 1 + (FC/OCF) Show all work as follows: Identify: Fixed Cost (FC) Operating Cash Flow (OCF) Then compute the degree of operating leverage (DOL)