We are evaluating a project that costs $822,600, has a nine-year life, and has no salvage value. Assume that depreclation Is straight-line to zero over the life of the project. Sales are projected at 75,000 units per year. Price per unit is $53, varlable cost per unit is $37, and fixed costs are $755,000 per year. The tax rate is 22 percent, and we require a return of 9 percent on this project. a-1.Calculate the accounting break-even polnt. (Do not round Intermediate calculations and round your answer to the nearest whole number, e.g., 32.) a- What is the degree of operating leverage at the accounting break-even polnt? (Do 2. not round Intermedlate calculations and round your answer to 3 decimal places, e.g., 32.161.) b-1.Calculate the base-case cash flow and NPV. (Do not round Intermedlate calculations. Round your cash flow answer to the nearest whole number, e.g., 32 Round your NPV answer to 2 decimal places, e.g., 32.16.) quantitysold? (Do not round

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Please help with answers asap 

Check my work
We are evaluating a project that costs $822,600, has a nine-year life, and has no salvage
value. Assume that depreclation Is stralght-line to zero over the life of the project. Sales
are projected at 75,000 units per year. Price per unit Is $53, varlable cost per unit Is $37,
and fixed costs are $755,000 per year. The tax rate is 22 percent, and we require a
return of 9 percent on this project.
a-1.Calculate the accounting break-even polnt. (Do not round Intermedlate calculations
and round your answer to the nearest whole number, e.g., 32.)
a- What Is the degree of operating leverage at the accounting break-even polnt? (Do
2. not round Intermedlate calculations and round your answer to 3 decimal places,
e.g., 32.161.)
b-1.Calculate the base-case cash flow and NPV. (Do not round Intermedlate
calculatlons. Round your cash flow answer to the nearest whole number, e.g., 32.
Round your NPV answer to 2 decimal places, e.g.., 32.16.)
b- What Is the sensitivity of NPV to changes In the quantity sold? (Do not round
2. Intermedlate calculatlons and round your answer to 2 decimal places, e.g., 32.16.)
c. What is the sensitivity of OCF to changes In the varlable cost figure? (A negatlve
answer should be Indicated by a minus sign. Do not round Intermedlate
calculations and round your answer to the nearest whole number, e.g.., 32.)
units
a-1.
Break-even point
a-2.
DOL
b-1.
Cash flow
NPV
b-2.
ANPVIAQ
C.
AOCF/AVC
Next >
10:10 PM
Transcribed Image Text:Check my work We are evaluating a project that costs $822,600, has a nine-year life, and has no salvage value. Assume that depreclation Is stralght-line to zero over the life of the project. Sales are projected at 75,000 units per year. Price per unit Is $53, varlable cost per unit Is $37, and fixed costs are $755,000 per year. The tax rate is 22 percent, and we require a return of 9 percent on this project. a-1.Calculate the accounting break-even polnt. (Do not round Intermedlate calculations and round your answer to the nearest whole number, e.g., 32.) a- What Is the degree of operating leverage at the accounting break-even polnt? (Do 2. not round Intermedlate calculations and round your answer to 3 decimal places, e.g., 32.161.) b-1.Calculate the base-case cash flow and NPV. (Do not round Intermedlate calculatlons. Round your cash flow answer to the nearest whole number, e.g., 32. Round your NPV answer to 2 decimal places, e.g.., 32.16.) b- What Is the sensitivity of NPV to changes In the quantity sold? (Do not round 2. Intermedlate calculatlons and round your answer to 2 decimal places, e.g., 32.16.) c. What is the sensitivity of OCF to changes In the varlable cost figure? (A negatlve answer should be Indicated by a minus sign. Do not round Intermedlate calculations and round your answer to the nearest whole number, e.g.., 32.) units a-1. Break-even point a-2. DOL b-1. Cash flow NPV b-2. ANPVIAQ C. AOCF/AVC Next > 10:10 PM
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps with 1 images

Blurred answer
Knowledge Booster
Tax Assistance and the Audit Process
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education