We are evaluating a project that costs $832,000, has an eight-year life, and has no salvage...

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Finance

We are evaluating a project that costs $832,000, has aneight-year life, and has no salvage value. Assume that depreciationis straight-line to zero over the life of the project. Sales areprojected at 40,000 units per year. Price per unit is $40, variablecost per unit is $15, and fixed costs are $728,000 per year. Thetax rate is 35 percent, and we require a return of 18 percent onthis project. a. Calculate the accounting break-even point. (Do notround intermediate calculations and round your answer to thenearest whole number, e.g., 32.) Break-even point 33280 units b-1Calculate the base-case cash flow and NPV. (Do not roundintermediate calculations and round your NPV answer to 2 decimalplaces, e.g., 32.16.) Cash flow $213200 NPV $37337.02 b-2 What isthe sensitivity of NPV to changes in the sales figure? (Do notround intermediate calculations and round your answer to 3 decimalplaces, e.g., 32.161.) ΔNPV/ΔQ $ _______ b-3 Calculate the changein NPV if sales were to drop by 500 units. (Enter your answer as apositive number. Do not round intermediate calculations and roundyour answer to 2 decimal places, e.g., 32.16.) NPV would decreaseby $ ______ c. What is the sensitivity of OCF to changes in thevariable cost figure? (A negative answer should be indicated by aminus sign. Do not round intermediate calculations and round youranswer to the nearest whole number, e.g., 32.) ΔOCF/ΔVC$________

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