Calculate the base-case cash flow and npv

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Reference no: EM13336377

We are evaluating a project that costs $848,000, 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 62,000 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 35 percent, and we require a 20 percent return on this project.

-Calculate the base-case cash flow and NPV
-What is the sensitivity of NPV to changes in the sales figure?
-What is the sensitivity of OCF to changes in the variable cost figure?

Reference no: EM13336377

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