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We are evaluating a project that costs $845,000, has an eight-year life, and has no salvage value. Assume that depreciationis straight-line to zero over the
We are evaluating a project that costs $845,000, has an eight-year life, and has no salvage value. Assume that depreciationis straight-line to zero over the life of the project. Sales are projected at 51,000 units per year. Price per unit is $53, variable cost per unit is $27, and fixed costs are $950,000 per year. The tax rate is 22 percent, and we require a return of 10 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.) a- What is the degree of operating leverage at the accounting break- 2. even point? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) b-1. Calculate the base-case cash flow and NPV. (Do not round intermediate 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 2. not round 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 variable costStep by Step Solution
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