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We are evaluating a project that costs $924,000. 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 $924,000. 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 75.000 units per year. Price per unit is $46. variable cost per unit is $31. and fixed costs are $825,000 per year. The tax rate is 35 percent, and we require a 15 percent return on this project. Calculate the accounting break-even point. What is the degree of operating leverage at the accounting break-even point? (Round your answer to 3 decimal places, (e.g., 32.161)) Calculate the base- case cash flow and NPV. (Do not round intermediate calculations and round your NPV answers to 2 decimal places, (e.g., 32.16)) What is the sensitivity of NPV to changes in the sales figure? (Do not round intermediate calculations and round your final answer to 2 decimal places, (e.g., 32.161)) What is the sensitivity of OCF to changes in the variable cost figure? (Negative amount should be indicated by a minus sign.)
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