A 9-year project is expected to generate annual sales of 8.700 units at a price of $74 per unit and a variable cost of $45 per unit. The equipment necessary for the project will cost $301,000 and will be depreciated on a straight-line basis over the life of the project. Fixed costs are $180.000 per year and the tax rate is 21 percent. How sensitive is the operating cash flow to a $1 change in the per unit sales price?

A 9-year project is expected to generate annual sales of 8.700 units at a price of $74 per unit and a variable cost of $45 per unit. The equipment necessary for the project will cost $301,000 and will be depreciated on a straight-line basis over the life of the project. Fixed costs are $180.000 per year and the tax rate is 21 percent. How sensitive is the operating cash flow to a $1 change in the per unit sales price?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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