Question
We are evaluating a project that costs $842,786, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over
We are evaluating a project that costs $842,786, has an eight-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 61,946 units per year. Price per unit is $37, variable cost per unit is $16, and fixed costs are $422,847 per year. The tax rate is 35%, and we require a return of 22% on this project.
In dollar terms, what is the sensitivity of OCF to changes in the variable cost per unit projection? (Round answer to 2 decimal places. Do not round intermediate calculations)
We are evaluating a project that costs $843,158, has an eight-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 64,605 units per year. Price per unit is $42, variable cost per unit is $17, and fixed costs are $421,890 per year. The tax rate is 35%, and we require a return of 21% on this project.
In percentage terms, what is the sensitivity of OCF to changes in the variable cost per unit projection? (Round answer to 2 decimal places. Do not round intermediate calculations)
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