Depaul University Operations And Supply Chain Management Assignment Help - Fianance Help...

Question - We are evaluating a project that costs $1,675,000, 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
91,000 units per year. Price per unit is $35.95, variable cost per unit is $21.40, and fixed costs are
$775,000 per year. The tax rate is 35 percent, and we require a return of 11 percent on this project.

1. Calculate the base-case cash flow and NPV
2. W hat is the sensitivity of NPV to changes in the sales figure?
3. If there is a 500-unit decrease in projected sales, how much would the NPV drop?
4. W hat is the sensitivity of OCF to changes in the variable cost figure?
5. If there is a $1 decrease in estimated variable costs, how m ...Read More uch would the increase in OCF be? ...Read Less

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