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We are evaluating a project that costs $ 1 , 7 7 0 , 0 0 0 , has a 6 - year life, and

We are evaluating a project that costs $1,770,000, has a 6-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 87,000 units per year. Price per unit is $38.13, variable cost per unit is $23.35, and fixed costs are $824,000 per year. The tax rate is 23 percent, and we require a return of 9 percent on this project.
1.
Calculate the base-case operating cash flow and NPV.
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g.,32.16.
2.
What is the sensitivity of NPV to changes in the sales figure?
Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g.,32.161.
3.
If there is a 300-unit decrease in projected sales, how much would the NPV change?
Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g.,32.16.
4.
What is the sensitivity of OCF to changes in the variable cost figure?
Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g.,32.
If there is a $1 decrease in estimated variable costs, how much would the OCF change?

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