Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

We are evaluating a project that costs $1,830,000, has a 6 -year life, anc value. Assume that depreciation is straight-line to zero over the life

image text in transcribed
We are evaluating a project that costs $1,830,000, has a 6 -year life, anc value. Assume that depreciation is straight-line to zero over the life of t are projected at 88,600 units per year. Price per unit is $38.25, variablt $23.45, and fixed costs are $830,000 per year. The tax rate is 25 require a return of 9 percent on this project. a. Calculate the base-case operating cash flow and NPV. (Do not round calculations and round your answers to 2 decimal places, e.g., 32.1 b. What is the sensitivity of NPV to changes in the sales figure? (Do not r intermediate calculations and round your answer to 3 decimal place c. If there is a 400-unit decrease in projected sales, how much would the (A negative answer should be indicated by a minus sign. Do not rou intermediate calculations and round your answer to 2 decimal place d. What is the sensitivity of OCF to changes in the variable cost figure? ( answer should be indicated by a minus sign. Do not round intermed calculations and round your answer to the nearest whole number, e e. If there is a $1 decrease in estimated variable costs, how much would change? (Do not round intermediate calculations and round your an nearest whole number, e.g., 32.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Linda Smith Bamber, Karen Wilken Braun, Jr. Harrison, Walter T.

1st Edition

0138129711, 978-0138129712

More Books

Students also viewed these Accounting questions