Consider a three-year project with the following information: initial fixed asset investment = $705,000; straight-line depreciation...
Consider a three-year project with the following information: initial fixed asset investment = $705,000; straight-line depreciation to zero over the 5-year life; zero salvage value; price = $39.31; variable costs = $28.25; fixed costs = $329,000; quantity sold = 86,000 units; tax rate = 23 percent.
a. What is the OCF at the base-case quantity sold?
OCF=
b. What is the OCF at 87,000 units sold?
OCF=
c. How sensitive is OCF to changes in quantity sold?
Homework Answers
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Consider a three-year project with the following information:
initial fixed asset investment = $705,000; straight-line
depreciation...
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Consider a three-year project with the following information: initial fixed asset investment = $665,000; straight-line depreciation...
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Consider a three-year project with the following information: initial fixed asset investment = $665,000; straight-line depreciation to zero over the five-year life; zero salvage value; price = $39.20; variable costs = $29.85; fixed costs = $315,000; quantity sold = 85,000 units; tax rate = 23 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) AOCFIAQ
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Consider a project with the following information: Initial fixed asset investment - $550,000 straight-line depreciation to zero over the 4-year life; zero salvage value: ole costs = $35: fixed costs = $228,000, quantity sold = 116,000 units tax rate = 23 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) AOCFIAQ
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