We are evaluating a project that costs-salvage value

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Reference no: EM13921913

We are evaluating a project that costs $1,422,000, has a six-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 88,200 units per year. Price per unit is $34.85, variable cost per unit is $21.10, and fixed costs are $762,000 per year. The tax rate is 35 percent, and we require a return of 11 percent on this project.

Base Cash Flow = 375937.50

NPV = 168417.824

Given the above information find the:

Sensitivity of NPV

NPV drop

Sensitivity of OCF

Increase in OCF

Reference no: EM13921913

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