Answered step by step
Verified Expert Solution
Question
1 Approved Answer
We are evaluating a project that costs $ 8 7 4 , 8 0 0 , has a nine - year life, and has no
We are evaluating a project that costs $ has a nineyear 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,unitsa DOL,,b Cash flow,$b NPVbcvdots
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started