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We are evaluating a project that costs $822,600, has a nine year life, and has no salvage value. Assume that depreciation is straight-line to zero
We are evaluating a project that costs $822,600, has a nine 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 75,000 units per year. Price per unit is $53, variable cost per unit is $37 and fixed costs are $755,000 per year. The tax rate is 22 percent, and we require a return of 9 percent on this project. a-1.Calculate the accounting break-even point. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) - What is the degree of operating leverage at the accounting break-even point? (Do 2. not round intermediate calculations and round your answer to 3 decimal places, e.... 32.161.) b- Calculate the base-case cash flow and NPV. (Do not round intermediate 1. calculations. Round your cash flow answer to the nearest whole number, e.g. 32. Round your NPV answer to 2 decimal places, e.g., 32.16.) b- What is the sensitivity of NPV to changes in the quantity sold? (Do not round 2. intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the sensitivity of OCF to changes in the varlable 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, e.g., 32.) 2-1. units Break-even point DOL a-2. 6.1. Cash flow NPV b-2 ANPVIA AOCF/AVC C
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