We are evaluating a project that costs $845,000, has an eight-year life, and has nosalvage value. Assume that depreciation is straight-line to zero over the life of theproject. Sales are projected at 51,000 units per year. Price per unit is $53, variable costper unit is $27, and fixed costs are $950,000 per year. The tax rate is 22 percent, and werequire a return of 10 percent on this project.a-1. Calculate the accounting break-even point. (Do not round intermediatecalculations and round your answer to the nearest whole number, e.g., 32.)a-2. What is the degree of operating leverage at the accounting break-even point? (Donot round intermediate calculations and round your answer to 3 decimal places,e.g., 32.161.)b-1. Calculate the base-case cash flow and NPV. (Do not round intermediatecalculations. Round your cash flow answer to the nearest whole number, e.g., 32.Round your NPV answer to 2 decimal places, e.g., 32.16.)b-2. What is the sensitivity of NPV to changes in the quantity sold? (Do not roundintermediate calculations and round your answer to 2 decimal places, e.g.,32.16.)What is the sensitivity of OCF to changes in the variable cost figure? (A negativeanswer should be indicated by a minus sign. Do not round intermediatecalculations.)C.a-1. Break-even pointunitsa-2. DOLb-1. Cash flowb-1. NPVb-2. ANPVIAQc. AOCF/AVC

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ung a project that costs $845,000, has an eight-year life, a e value. Assume that depreciation is straight-line to zero over the - Sales are projected at 51,000 units per year. Price per unit is $53 t is $27, and fixed costs are $950,000 per year. The tax rate is 22 a return of 10 percent on this project. alculate the accounting break-even point. (Do not round intermedi Iculations and round your answer to the nearest whole numhor

ung a project that costs $845,000, has an eight-year life, a e value. Assume that depreciation is straight-line to zero over the - Sales are projected at 51,000 units per year. Price per unit is $53 t is $27, and fixed costs are $950,000 per year. The tax rate is 22 a return of 10 percent on this project. alculate the accounting break-even point. (Do not round intermedi Iculations and round your answer to the nearest whole numhor

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 13P

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