Sun Brite has a new pair of sunglasses it is evaluating. The company expects to sell 5,000 pairs of sunglasses at a price of $145 each and a variable cost of $97 each. The equipment necessary for the project will cost $265,000 and will be depreciated on a straight-line basis over the 5-year life of the project. Fixed costs are $115,000 per year and the tax rate is 21 percent. How sensitive is the operating cash flow to a $1 increase in variable costs per pairs of sunglasses?

Multiple Choice $3,555 $3,555 $4,389 $3,950 $3,950