Sun Brite has a new pair of sunglasses it is evaluating. The company expects to sell 6,000 pairs of sunglasses at a price of $155 each and a variable cost of $107 each. The equipment necessary for the project will cost $315,000 and will be depreciated on a straight-line basis over the 7-year life of the project. Fixed costs are $210,000 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

$4,333

$3,510

$3,900

$4,740

$3,510