solve please answer Consider a four-year project with the followinginformation: initial fixed asset investment = $570,000;straight-line depreciation to zero over the four-year life;zero salvage value; price = $30; variable costs = $22;fixed costs = $210,000; quantity sold = 87,000 units; taxrate = 32%.a. What is the degree of operating leverage at the givenlevel of output?b. What is the degree of operating leverage at theaccounting break-even level of output?

Let's break this down step by step.Given Information:Initial fixed asset investment =…

Answered: Consider a four-year project with the…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter11: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

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A project has fixed costs of $400 per year, depreciation charges of $400 a year, annual revenue of $3,600, and variable costs equal to two-thirds of revenues. a. If sales increase by 17%, what will be the percentage increase in pretax profits? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. What is the degree of operating leverage of this project? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Need answer for this question provide answer for a and b
A project has fixed costs of $1,300 per year, depreciation charges of $500 a year, annual revenue of $8,100, variable costs equal to two-thirds of revenues and the tax rate is 20%. a. If sales increase by 10%, what will be the increase in pretax profits? Increase in pretax profits % b. What is the degree of operating leverage of this project? (Round your answer to 1 decimal place.) Degree of operating leverage times
You are analyzing a project and have developed the following estimates. The depreciation is $47,900 a year and the tax rate is 21 percent. What is the worst-case operating cash flow? Unit sales Sales price per unit Variable cost per unit Fixed costs -$2,545 $11,145 $88,855 $27,556 O $63,937 Base-Case Lower Bound Upper Bound 9,800 12,800 $34 $24 $ 9,200 11,300 $ 39 $25 $ 9,700 $44 $26 $ 10,200
You are analyzing a project and have developed the following estimates: unit sales = 2,150, price per unit = $84, variable cost per unit = $57, fixed costs per year = $13,900. The depreciation is $8,300 a year and the tax rate is 35 percent. What effect would an increase of $1 in the selling price have on the operating cash flow?
maka
General Accounting Question Solution Please with calculation
You are considering the following project. What is the NPV of the project? WACC of the project: 0.10 Revenue growth rate: 0.05 Tax rate: 0.40 Revenue for year 1: 13,000 Fixed costs for year 1: 3,000 variable costs (% of revenue): 0.30 project life: 3 years Economic life of equipment: 3 years Cost of equipment: 20,000 Salvage value of equipment: 4,000 Initial investment in net working capital: 2,000
A proposed project has fixed costs of $88,000 per year. The operating cash flow at 11,300 units is $116,500. Ignore the effect of taxes. What is the degree of operating leverage?
A project has the following estimated data: Price = $56 per unit; variable costs = $35 per unit; fixed costs = $18,500; required return = 8 percent; initial investment = $45,000; life = five years. a. Ignoring the effect of taxes, what is the accounting break-even quantity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the cash break-even quantity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the financial break-even quantity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What is the degree of operating leverage at the financial break-even level of output? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) a. Accounting break-even quantity b. Cash break-even quantity c. Financial break-even quantity d. DOL
You are analyzing a project and have developed the following estimates. The depreciation is $7,600 a year and the tax rate is 34 percent. What is the worst-case operating cash flow? Unit sales Sales price Variable cost Fixed costs TTT Base Case 3.100 $19 $12 $8.200 Lower Bound 2,500 $16 $10 $7.800 Upper Bound 3,400 $22 $14 $8.500 per unit O 1) -$1,311 O 2) -$641 3) $274 4) $1,206

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