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We are evaluating a project that costs $732,000. has a six-year life, and has no salvage value. Assume that depreciation is straight-line to zero over
We are evaluating a project that costs $732,000. has a six-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 55.000 units per year. Price per unit is $60. variable cost per unit is $30. and fixed costs are $640,000 per year. The tax rate is 35 percent, and we require a 12 percent return on this project.a-1 Calculate the accounting break-even point. Break-even point units a-2 What is the degree of operating leverage at the accounting g break-even point? (Round your answer to 3 decimal places, (e.g., 32.161)) DOL b-1 Calculate the base-case cash flow and NPV. (Round your NPV answer to 2 decimal places, (e.g.,32.16)) Cash flow $ 699.200 NPV $ 2,142,696 b-2 What is the sensitivity of NPV to changes in the sales figure? (Do not round intermediate calculations and round your answer to 3 decimal places, (e.g., 32.161)) DeltaNPV/DeltaQDelta $ 80.17 c. What is the sensitivity of OCF to changes in the variable cost figure? (Negative amount should be indicated by a minus sign.)DeltaOCF/DeltaVC $ 35.750 We are evaluating a project that costs $732,000. has a six-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 55.000 units per year. Price per unit is $60. variable cost per unit is $30. and fixed costs are $640,000 per year. The tax rate is 35 percent, and we require a 12 percent return on this project.a-1 Calculate the accounting break-even point. Break-even point units a-2 What is the degree of operating leverage at the accounting g break-even point? (Round your answer to 3 decimal places, (e.g., 32.161)) DOL b-1 Calculate the base-case cash flow and NPV. (Round your NPV answer to 2 decimal places, (e.g.,32.16)) Cash flow $ 699.200 NPV $ 2,142,696 b-2 What is the sensitivity of NPV to changes in the sales figure? (Do not round intermediate calculations and round your answer to 3 decimal places, (e.g., 32.161)) DeltaNPV/DeltaQDelta $ 80.17 c. What is the sensitivity of OCF to changes in the variable cost figure? (Negative amount should be indicated by a minus sign.)DeltaOCF/DeltaVC $ 35.750
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