Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. we are evaluating a project that costs $1,675,000,

We are evaluating a project that costs $1,675,000, has a six-year life, and has no...

60.1K

Verified Solution

Question

Accounting

We are evaluating a project that costs $1,675,000, has a six-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 91,000 units per year. Price per unit is $35.95, variable cost per unit is $21.40, and fixed costs are $775,000 per year. The tax rate is 35 percent, and we require a return of 11 percent on this project.

What is the sensitivity of OCF to changes in the variable cost figure?

Sensitivity of OCF ------> $.................

If there is a $1 decrease in estimated variable costs, how much would the increase in OCF be?

Increase in OCF ------> $.................

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

A 515-Hz tuning fork is struck and placed next to a tube with a movable piston,...

Physics
Q

4 A charge of 17 7 x 104 C is distributed uniformly over a large...

Physics
Q

graphed below 12 11 10 9 8 7 6 5 4 3 4 5 12...

Geometry
Q

Two straight roads diverge at an angle of 45. Two cars leave the intersection at...

Basic Math
Q

TAL Distributor database 334 665 Rep RepNum LastName FirstName Street City State PostalCode Commission...

Accounting
Q

A company just starting business made the following four inventory purchases in June: June 1...

Accounting
Q

The following information is avail able for the reconciliation: From the March 31 bank statement:...

Accounting
Q

The following events took place when managers were preparing budgets for the upcoming period. Assuming...

Accounting
Q

The president of Bright Corporation tells you that he sees a dim future for his...

Accounting
Q

Myers Corporation has the following data related to direct materials costs for November: actual costs...

Accounting
Q

Forward company makes all its sales on account. Forwards accounts receivable payment exoerience is as...

Accounting
Q

Question: 1. Compute Northtown's current ratio, debt ratio, and earnings per share. Round all ratios...

Accounting