Question

pls help asap! show calculations

10 points Save Answer Consider a four-year project with the following information: initial fixed asset investment = $375,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $56; variable costs = $23; fixed costs = $195,000; quantity sold = 84,000 units; tax rate = 34%. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit S sign in your response.) (Do not forget to include + or - sign)

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

JUST WRITTEN IN EXCEL, NO EXCEL FUNCTION IS USED

ANSWER = + 21.78

00:09 W ENG 66 01-08-2020 34 Х AE60 ** AC AD AE AF AG AH AL AJ AK AL AM AN AO 40 41 DEPRECIATION = 93750.00 [375000/4] 42 43 44 OCF =( (sp-vc)(units) - fixed cost)(1-t) + t(depreciation) OCF =( (56-23)(84000) - 195000)(1-0.34) + (0.34)*(93750) OCF = 1732695 + 45 46 47 48 To calculate sensitivity, we have to take one more sale quantity let us take sale quantity = 85000 49 50 51 52 53 OCF =( (sp-vc)(units) - fixed cost)(1-t) + t(depreciation) OCF = ( (56-23)(85000) - 195000)(1-0.34) + (0.34)*(93750) OCF = 1754475 54 55 56 The sensitivity of OCF to changes in quantity Echange in OCF/change in quantity ANSWER The sensitivity of OCF to changes in quantity = (1754475-1732695)/(85000-84000) = 21.78 57 58 59 60 61 62 63 payback irr BEST WORST Sheet2 PRICEQUANTITY OCF ACC BE, CASH BE, FIN BE BASE CASE MIN LEVEL SENSITIVITY Shet ...