Consider a three-year project with the following information: Initial fixed asset investment = $725,000; straight-line depreciation to zero over the 5-year life; zero salvage value; price = $39.63; variable costs = $28.49; fixed costs = $341,000; quantity sold = 90,000 units; tax rate = 22 percent. How sensitive is OCF to changes in quantity sold?...
Consider a three-year project with the following information: Initial fixed asset investment = $725,000; straight-line depreciation to zero over the 5-year life; zero salvage value; price = $39.63; variable costs = $28.49; fixed costs = $341,000; quantity sold = 90,000 units; tax rate = 22 percent. How sensitive is OCF to changes in quantity sold?...
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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Stepwise with all formulas and concept.
![Consider a three-year project with the
following information: Initial fixed asset
investment = $725,000; straight-line
depreciation to zero over the 5-year
life; zero salvage value; price = $39.63;
variable costs $28.49; fixed costs =
$341,000; quantity sold = 90,000 units; tax
rate=22 percent. How sensitive is OCF to
changes in quantity sold?...](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Febe7f2a9-e54b-4d9c-ac78-c402fdeb43c3%2F56b1c8ae-61a7-43f4-b178-360c03f30d0b%2F4778mdo_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Consider a three-year project with the
following information: Initial fixed asset
investment = $725,000; straight-line
depreciation to zero over the 5-year
life; zero salvage value; price = $39.63;
variable costs $28.49; fixed costs =
$341,000; quantity sold = 90,000 units; tax
rate=22 percent. How sensitive is OCF to
changes in quantity sold?...
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