We are evaluating a project that costs $1,080,000, has a ten-year life, and has no salvage...

We are evaluating a project that costs $1,080,000, has a ten-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 52,000 units per year. Price per unit is $48, variable cost per unit is $27, and fixed costs are $756,000 per year. The tax rate is 25 percent, and we require a return of 15 percent on this project.

a.	Calculate the accounting break-even point. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b-1.	Calculate the base-case cash flow and NPV. (Do not round intermediate calculations and round your NPV answer to 2 decimal places, e.g., 32.16.)
b-2.	What is the sensitivity of NPV to changes in the sales figure? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)
b-3.	Calculate the change in NPV if sales were to drop by 500 units. (Enter your answer as a positive number. Do 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 cost figure

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jeff jeffy answered 2 years ago

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