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Problem 11-5 Sensitivity Analysis and Break-Even [LO1, 3] We are evaluating a project that costs $788,400, has a nine-year life, and has no salvage value.
Problem 11-5 Sensitivity Analysis and Break-Even [LO1, 3] We are evaluating a project that costs $788,400, has a nine-year life, and has no salvage value. Assume that depreclation is straight-line to zero over the life of the project. Sales are projected at 75,000 units per year. Price per unit is $52, varlable cost per unit is $36, and fixed costs are $750,000 per year. The tax rate is 21 percent, and we require a return of 12 percent on this project. a-1.Calculate the accounting break-even point (Do not round Intermedlate calculatlons and round your answer to the nearest whole number, e.g., 32.) a- What is the degree of operating leverage at the accounting break-even point? (Do 2. not round Intermedlate calculations and round your answer to 3 declmal places, e.g., 32.161.) b- Calculate the base-case cash flow and NPV. (Do not round Intermedlate 1. calculatlons. Round your cash flow answer to the nearest whole number, e.g., 32. Round your NPV answer to 2 declmal places, e.g., 3216.) b- What is the sensitivity of NPV to changes In the quantity sold? (Do not round 2. Intermedlate calculatlons and round your answer to 2 decimal places, e.g., 32.16.) c. What is the sensitivity of OCF to changes in the varlable cost figure? (A negative answer should be Indlcated by a minus sign. Do not round Intermedlate calculations and round your answer to the nearest whole number, e.g., 32. )
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