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We are evaluating a project that costs value. Assume that depreciation is straight line to zero over the life of the project. Sales are projected
We are evaluating a project that costs value. Assume that depreciation is straight line to zero over the life of the project. Sales are projected at 85,000 units per year. Price per unit is $37, variable cost per unit is $23, $585.000, has a six year life, and has no salvage and fixed costs are $675.000 per year. The tax rate is 21 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.) e 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.g. 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 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, e.g.. 32.) units a-1. Break even point a-2. DOL b-1. Cash fow NPV Prex 1301 1sll! Next>
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