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We are evaluating a project that costs $848,000, has a life of 8 years, and...

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Accounting

We are evaluating a project that costs $848,000, has a life of 8 years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 45,000 units per year. Price per unit is $40, variable cost per unit is $20, and fixed costs are $625,000 per year. The tax rate is 24 percent, and we require a return of 14 percent on this project. 1. What is the sensitivity of NPV to changes in the sales figure? 2. What is the sensitivity of OCF to changes in the variable cost figure? Show work

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