Consider a four-year project with the following information: Initial fixed asset investment = $565,000; straight-line depreciation to zero over the four-year life; zero salvage value; price $39; variable costs $24; fixed costs $240,000; quantity sold = 85,000 units; tax rate 21 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) AOCF/AQ =
Consider a four-year project with the following information: Initial fixed asset investment = $565,000; straight-line depreciation to zero over the four-year life; zero salvage value; price $39; variable costs $24; fixed costs $240,000; quantity sold = 85,000 units; tax rate 21 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) AOCF/AQ =
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
![Consider a four-year project with the following information: Initial fixed asset investment
= $565,000; straight-line depreciation to zero over the four-year life; zero salvage value;
price $39; variable costs $24; fixed costs $240,000; quantity sold = 85,000 units;
=
tax rate 21 percent. How sensitive is OCF to changes in quantity sold? (Do not round
intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
AOCF/AQ](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F78b3cf13-b25a-49d4-8c8d-21616b12cfc8%2F4ecf9a83-8a41-4a3a-b88a-2d1a0eea5b44%2Fn3pqlsl_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Consider a four-year project with the following information: Initial fixed asset investment
= $565,000; straight-line depreciation to zero over the four-year life; zero salvage value;
price $39; variable costs $24; fixed costs $240,000; quantity sold = 85,000 units;
=
tax rate 21 percent. How sensitive is OCF to changes in quantity sold? (Do not round
intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
AOCF/AQ
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