Sensitivity to ocf to changes in the variable cost figure

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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 return of 20 percent on this project.

A- Calculate the base cash flow and NPV?

B- What is the Sensitivity to NPV to changes in sales figures?

C- what is the sensitivity to OCF to changes in the variable cost figure?

Reference no: EM131328336

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