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Business, 12.08.2020 06:01 dbrwnn

Sensitivity Analysis Consider a three-year project with the following information: initial fixed asset investment = $665,000; straight-line depreciation to zero over the five-year life; zero salvage value; price = $39.20; variable costs = $29.85; fixed costs = $315,000; quantity sold = 85,000 units; tax rate = 23 percent. How sensitive is OCF to changes in quantity sold? Specifically, calculate the following: a) OCF when quantity is 85,000 b) OCF when quantity increases by 1,000 c) Rate of change in OCF for every change in quantity d) Show all your work and summarize your results ans state how sensitive is OCF to changes in quantity.

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