We are evaluating a project that costs $924,000, has an eight-year life, and has

Question

We are evaluating a project that costs $924,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 75,000 units per year. Price per unit is $46, variable cost per unit is $31, and fixed costs are $825,000 per year. The tax rate is 35 percent, and we require a 15 percent return on this project.

Calculate the accounting break-even point.

What is the degree of operating leverage at the accounting break-even point?(Round your answer to 3 decimal places. (e.g., 32.161))

Calculate the base-case cash flow and NPV.(Round your NPV answers to 2 decimal places. (e.g., 32.16))

What is the sensitivity of NPV to changes in the sales figure?(Do not round intermediate calculations and round your final answer to 3 decimal places. (e.g., 32.161))

We are evaluating a project that costs $924,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 75,000 units per year. Price per unit is $46, variable cost per unit is $31, and fixed costs are $825,000 per year. The tax rate is 35 percent, and we require a 15 percent return on this project.

Explanation / Answer

break-even point.=55,000.00 uints.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.