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Question o Consider a 5-year project with an initial fixed asset investment of $324,000, straight-line depreciation to zero over the project's life, a salvage value of zero, a selling price of $34, variable costs of $17, fixed costs of $189,700, a sales quantity of 94.000 units, and a tax rate of 21 percent. What is the sensitivity of OCF to changes in the sales price? A) $59.470 per $1 of sales B) $74.260 per $1 of sales $78.700 per $1 of sales (D) $61.600 per $1 of sales $68.850 per $1 of sales

Question o Consider a 5-year project with an initial fixed asset investment of $324,000, straight-line depreciation to zero over the project's life, a salvage value of zero, a selling price of $34, variable costs of $17, fixed costs of $189,700, a sales quantity of 94.000 units, and a tax rate of 21 percent. What is the sensitivity of OCF to changes in the sales price? A) $59.470 per $1 of sales B) $74.260 per $1 of sales $78.700 per $1 of sales (D) $61.600 per $1 of sales $68.850 per $1 of sales

Essentials Of Investments
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 o Consider a 5-year project with an initial fixed asset investment of $324,000, straight-line depreciation to zero over the project's life, a salvage value of zero, a selling price of $34, variable costs of $17, fixed costs of $189,700, a sales quantity of 94.000 units, and a tax rate of 21 percent. What is the sensitivity of OCF to changes in the sales price? A) $59.470 per $1 of sales B) $74.260 per $1 of sales $78.700 per $1 of sales (D) $61.600 per $1 of sales $68.850 per $1 of sales
Transcribed Image Text:Question o Consider a 5-year project with an initial fixed asset investment of $324,000, straight-line depreciation to zero over the project's life, a salvage value of zero, a selling price of $34, variable costs of $17, fixed costs of $189,700, a sales quantity of 94.000 units, and a tax rate of 21 percent. What is the sensitivity of OCF to changes in the sales price? A) $59.470 per $1 of sales B) $74.260 per $1 of sales $78.700 per $1 of sales (D) $61.600 per $1 of sales $68.850 per $1 of sales
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