Question

Consider a project with the following information: Initial fixed asset investment = $490,000; straight-line depreciation to zero over the 4-year life; zero salvage value; price = $42; variable costs = $25; fixed costs = $192,000; quantity sold = 92,000 units; tax rate = 21 percent. |

How sensitive is OCF to changes in quantity sold? |

Answer #1

Consider a 9-year project with the following information:
initial fixed asset investment = $430,000; straight-line
depreciation to zero over the 9-year life; zero salvage value;
price = $32; variable costs = $17; fixed costs = $167,700; quantity
sold = 98,943 units; tax rate = 33 percent. How sensitive is OCF to
changes in quantity sold?

Consider a four-year project with the following information:
initial fixed asset investment = $476061; straight-line
depreciation to zero over the four-year life; zero salvage value;
price = $34; variable costs = $24; fixed costs = $194366; quantity
sold = 79941 units; tax rate = 31 percent. Calculate the
sensitivity of the OCF to changes in the quantity sold. (Do not
round intermediate calculations and round your final answer to 2
decimal places. Omit the "$" sign and commas in your...

Consider a four-year project with the following information:
initial fixed asset investment = $491,731; straight-line
depreciation to zero over the four-year life; zero salvage value;
price = $33; variable costs = $24; fixed costs = $195,602; quantity
sold = 79,813 units; tax rate = 36 percent. Calculate the
sensitivity of the OCF to changes in the quantity sold.
[Hint: Think of this as, "How much does OCF change if we
can sell one more unit each year?"]
(Do not round...

Consider a four-year project with the following information:
initial fixed asset investment = $540,000; straight-line
depreciation to zero over the four-year life; zero salvage value;
price = $34; variable costs = $23; fixed costs = $215,000; quantity
sold = 70,000 units; tax rate = 21 percent.
a.
What is the degree of operating leverage at the given level of
output? (Do not round intermediate calculations and round
your answer to 4 decimal places, e.g., 32.1616.)
b.
What is the...

(ABC) Consider a 4 year project with the following
information:
Initial fixed asset investment = $475,000;
straight line depreciation to zero over the 4-year life;
zero salvage value;
price = $26; variable costs = $18;
fixed costs = $195,000
Quantity sold = 84,000 units
Tax rate = 34%
How sensitive is OCF to changes in quantity sold? use $76,000
units for your new calculations
(do not roundintermediate calculaitons, round final answer to 2
decimal places)

Consider a four-year project with the following information:
initial fixed asset investment = $625,000; straight-line
depreciation to zero over the four-year life; zero salvage value;
price = $51; variable costs = $39; fixed costs = $300,000; quantity
sold = 121,000 units; tax rate = 23 percent.
a.
What is the degree of operating leverage at the given level of
output? (Do not round intermediate calculations and round
your answer to 4 decimal places, e.g., 32.1616.)
b.
What is the...

102. Consider a 6-year project with the following information:
initial fixed asset investment = $460,000; straight-line
depreciation to zero over the 6-year life; zero salvage value;
price = $34; variable costs = $19; fixed costs = $188,600; quantity
sold = 90,528 units; tax rate = 32 percent. What is the sensitivity
of OCF to changes in quantity sold? A. $10.20 per unit B. $11.16
per unit C. $11.38 per unit D. $12.33 per unit E. $12.54 per unit
OCF =...

Quad Enterprises is considering a new three-year expansion
project that requires an initial fixed asset investment of $2.32
million. The fixed asset will be depreciated straight-line to zero
over its three-year tax life, after which time it will be
worthless. The project is estimated to generate $1,660,000 in
annual sales, with costs of $635,000. If the tax rate is 21
percent, what is the OCF for this project? (Do not round
intermediate calculations and enter your answer in dollars, not...

Quad Enterprises is considering a new three-year expansion
project that requires an initial fixed asset investment of $2.29
million. The fixed asset will be depreciated straight-line to zero
over its three-year tax life, after which time it will be
worthless. The project is estimated to generate $1,715,000 in
annual sales, with costs of $625,000. The tax rate is 21 percent
and the required return on the project is 10 percent. What is the
project’s NPV? (Do not round intermediate
calculations....

Quad Enterprises is considering a new three-year expansion
project that requires an initial fixed asset investment of $2.31
million. The fixed asset will be depreciated straight-line to zero
over its three-year tax life, after which time it will be
worthless. The project is estimated to generate $1,657,000 in
annual sales, with costs of $633,000. If the tax rate is 25
percent, what is the OCF for this project? (Do not round
intermediate calculations and enter your answer in dollars, not...

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