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Business, 19.05.2020 20:14 ellie4678

We are evaluating a project that costs $735,200, has an eight-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 80,000 units per year. Price per unit is $48, variable cost per unit is $33, and fixed costs are $730,000 per year. The tax rate is 22 percent, and we require a return of 12 percent on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±15 percent.(a-1) Calculate the accounting break-even point. (Do not round intermediate calculations and round your answer to the nearest whole number, e. g., 32.)(a-2) What is the degree of operating leverage at the accounting break-even point? (Do not round intermediate calculations and round your answer to 3 decimal places, e. g., 32.161.)(b-1) Calculate the base-case cash flow and NPV. (Do not round intermediate calculations. Round your cash flow answer to the nearest whole number, e. g., 32. Round your NPV answer to 2 decimal places, e. g., 32.16.)(b-2) What is the sensitivity of NPV to changes in the quantity sold? (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? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e. g., 32. )

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We are evaluating a project that costs $735,200, has an eight-year life, and has no salvage value. A...
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