Consider a four-year project with the following information: Initial fixed asset investment = $635,000; straight-line depreciation to zero over the four-year life; zero salvage value; price $53; variable costs = $44; fixed costs = $310,000; quantity sold = 127,000 units; ax rate 25 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) = AOCF/AQ

Consider a four-year project with the following information: Initial fixed asset investment = $635,000; straight-line depreciation to zero over the four-year life; zero salvage value; price $53; variable costs = $44; fixed costs = $310,000; quantity sold = 127,000 units; ax rate 25 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) = AOCF/AQ

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Consider a project with the following information: Initial fixed asset investment = $515,000; straight-line depreciation to zero over the 4-year life; zero salvage value; price = $47; variable costs = $29; fixed costs = $207,000; quantity sold = 102,000 units; tax rate = 21 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Change in OCF/ Change in Q =?
Consider a project with the following information: Initial fixed asset investment = $515,000; straight-line depreciation to zero over the 4-year life; zero salvage value; price = $47; variable costs = $29; fixed costs = $207,000; quantity sold = 102,000 units; tax rate = 21 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) find the change in OCF/Change in Q
Consider a four-year project with the following information: initial fixed asset investment = $480,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $31; variable costs = $24; fixed costs = $200,000; quantity sold = 89,000 units; tax rate = 34%. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) AOCF/AQ
3. Consider a three-year project with the following information: initial fixed asset investment = $698,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $34.15; variable costs = $22.60; fixed costs = $210,500; quantity sold = 96,500 units; tax rate = 40 percent. Required: What is the OCF at the base-case quantity sold? OCF What is the OCF at 97,500 units sold? OCF How sensitive is OCF to changes in quantity sold? AOCF/AQ $ $
Consider a project with the following information: Initial fixed asset investment = $540,000; straight-line depreciation to zero over the 4-year life; zero salvage value; price = $52; variable costs = $33; fixed costs = $222,000; quantity sold = 112,000 units; tax rate = 21 percent. How sensitive is OCF to changes in quantity sold?
Consider a project with a life of 4 years with the following information: initial fixed asset investment = $370,000; straight - line depreciation to zero over the 4 - year life; zero salvage value; price = $26; variable costs = $18; fixed costs $177,600; quantity sold = 85,248 units; tax rate 25 percent. How sensitive is OCF to changes in quantity sold? Multiple Choice $6.84 $6.00 $4.26 $0.17 $7.74
You are considering an investment proj ect with the following financialin formation:(a) Required investment = $500,000(b) Project life= 5 years(c) Salvage value= $50,000(d) Depreciation method = s traight-line depreciation (no ha lf-year convention)(e) Unit price = $40(f) Unit variable cost = $18(g) Fixed annual cost = $230.000(h) Annual sales volume= I 00,000 units(i) Tax rate = 35%G) MARR = 15%Suppose the company is most concerned about the impact of its price estimate on the projects rate of return. How would you address this concern
Please answer it very very fast. typed answer only. I ll UPVOTE the answer.thank you Consider a four-year project with the following information: initial fixed asset investment = $430,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $24; variable costs = $16; fixed costs = $120,000; quantity sold = 72,000 units; tax rate = 23 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Consider a four-year project with the following information: initial fixed asset investment = $430,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $24; variable costs = $16; fixed costs = $120,000; quantity sold = 72,000 units; tax rate = 23 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Consider a project with a life of 3 years with the following information: initial fixed asset investment = salvage value; price = $35; variable costs $13; fixed costs = $112,000; quantity sold = 53,760 units; tax rate = 23 percent. How sensitive is OCF to changes in quantity sold? $320,000; straight-line depreciation to zero over the 3-year life; zero Multiple Choice $21.85 $0.06 $19.31
You are considering an investment project with the following financial information: Required investment = $500,000 Project life = 5 years Salvage value = $50,000 Depreciation method = straight-line deprecation (no half-year convention) Unit price = $40 Unit variable cost = $18 Fixed annual cost = $230,000 Annual sales volume = 100,000 units Tax rate = 35% MARR = 15% The company is concerned about the price estimate they have used to calculate the rate of return. Using sensitivity analysis, how much can the price vary to still break-even? The company believes that their estimates for unit price, demand, variable cost, fixed cost, and salvage value are accurate to +/- 10%. Using scenario analysis compare the base case to the best-case and worst-case scenarios.
Q2. Suppose you are considering the following project with most-likely values: • Project life = 6 years Required investment= $1,000,000 • Salvage value = 80,000 • Depreciation method = 5-year MACRS • Sales volume = 65,000 units annually • Price per unit = $60 • Variable cost per unit - $40 • Fixed annual cost = $532,000 Tax rate = 35% • MARR = 20% (a) Compute the NPW for the most likely case showing all computations. (b) If you were told that the unit price, anmual sales volume, unit variable costs, and fixed costs are all accurate to within +15%, what would be the NPW in the best-case and in the worst case?
The Whenworth Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) Cash Flow (II) -$87,000 36,900 47,000 27,000 -$55,000 11,700 34,500 28,500 1 3 a-1. If the required return is 10 percent, what is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) a-2. If the company applies the profitability index decision rule, which project should it take? b-1. If the required return is 10 percent, what is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b-2. If the company applies the net present value decision rule, which project should it take? a-1. Project I Project II а-2. b-1. Project I Project II b-2.

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