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Business, 12.11.2019 23:31 silverdays566

We are evaluating a project that costs $520,000, has a five-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 73,000 units per year. price per unit is $50, variable cost per unit is $30, and fixed costs are $832,000 per year. the tax rate is 35 percent, and we require a return of 10 percent on this project.

a. calculate the break even point.

b-1. calculate the base case cash flow and npv rounding to 2 decimal places.

b-2. what is the sensitivity of npv to changes in the sales figure? (npv/q)

b-3. calculate the change in npv if sales were to drop by 500 units.

c. what is the sensitivity of ocf to changes in the variable cost figure? (ocf/vc)

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