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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
We are evaluating a project that costs $670,000, 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 59,000 units per year. Price per unit is $44, variable cost per unit is $24, and fixed costs are $760,000 per year. The tax rate is 35 percent, and we require a 18 percent return on this project.
| a. |
Calculate the accounting break-even point. (Do not round intermediate calculations and round your final answer to nearest whole number. (e.g., 32)) |
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| Break-even point | units |
| b-1 |
Calculate the base-case cash flow and NPV.(Do not round intermediate calculations and round your NPV answers to 2 decimal places. (e.g., 32.16)) |
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| Â | Â | |
| Cash flow | $ | |
| NPV | $ | |
Â
| b-2 |
What is the sensitivity of NPV to changes in the sales figure?(Do not round intermediate calculations and round your final answer to 3 decimal places. (e.g., 32.161)) |
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| ?NPV/?Q | $ |
| c. |
What is the sensitivity of OCF to changes in the variable cost figure? (Do not round intermediate calculations and Negative amount should be indicated by a minus sign.) |
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