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We are evaluating a project that costs $ 2 , 1 0 0 , 0 0 0 , has a 7 - year life, and
We are evaluating a project that costs $ has a year life, and has no salvage value. Assume that depreciation is straightline to zero over the life of the project. Sales are projected at units per year. Price per unit is $ variable cost per unit is $ and fixed costs are $ per year. The tax rate is percent, and we require a return of percent on this project.
a Calculate the basecase operating cash flow and NPV
Note: Do not round intermediate calculations and round your answers to decimal places, eg
b What is the sensitivity of NPV to changes in the sales figure?
Note: Do not round intermediate calculations and round your answer to decimal places, eg
c If there is a 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 decimal places, eg
d 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, eg
e If there is a $ decrease in estimated variable costs, how much would the OCF change?
Note: Do not round intermediate calculations and round your answer to the nearest whole number, eg
tablea Basecase operating cash flowBasecase NPVb NPV sensitivityc NPV changed OCF sensitivitye OCF change
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