Sensitive is operating cash flow to changes in quantity

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Reference no: EM1339892

Q1) Consider a 2-year project with the following information: initial fixed asset investment = $495,000; straight line depreciation to zero over the 2-year life; zero salvage value; selling price = $39; variable costs = $20; fixed costs = $210,000; quantity sold = 150,000 units; tax rate = 31 percent. How sensitive is Operating Cash Flow (OCF)to changes in quantity sold? State your answer in terms of a dollar amount change (increase or decrease) in OCF for every additional unit sold.

Reference no: EM1339892

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