The Salty Sailboats Corporation is considering whether or not to launch its new Chris- class sailboat. Marketing research says the new sailboat will sell 61 units per year. The selling price will be $70,000 per boat. The variable costs per boat will be 50% of selling price, and fixed costs will be $350,000 per year. The total investment needed to undertake the project is $5,000,000. This amount (1) will be depreciated straight- 5/9 21 line to zero over the five-year life of the equipment. The salvage value is zero, and there are no working capital consequences. Salty Sailboats has a 20 percent required return on new projects. At 20 percent, the five-year annuity factor is 2.9906, so the project has a zero NPV when the present value of the operating cash flows equals the $5,000,000 investment. Because the cash flow is the same each year, we can solve for the unknown amount by viewing it as an ordinary annuity. Since the five-year annuity factor at 20 percent is 2.9906, the OCF* can be determined as follows: OCF*= $5,000,000/2.9906. What is the OCF at 75 units? $1,725,000 $1,650,000 $2,350,000 $2,275,000