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We are evaluating a project that costs $ 5 6 9 , 1 0 0 , has a six - year life, and has no
We are evaluating a project that costs $ has a sixyear 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.
aCalculate the accounting breakeven point. Do not round intermediate calculations and round your answer to the nearest whole number, eg
a What is the degree of operating leverage at the accounting breakeven point? Do
not round intermediate calculations and round your answer to decimal places, eg
b Calculate the basecase cash flow and NPVDo not round intermediate
calculations. Round your cash flow answer to the nearest whole number, eg Round your NPV answer to decimal places, eg
b What is the sensitivity of NPV to changes in the quantity sold? Do not round
intermediate calculations and round your answer to decimal places, eg
c What is the sensitivity of OCF to changes in the variable cost figure? 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
tablea Breakeven point,anits,a DOL,,b Cash flow,,b NPVbc
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