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# Needing help with portion b-3 and c. I have solved the other portions. We are evaluating...

## Question

###### Needing help with portion b-3 and c. I have solved the other portions. We are evaluating...

Needing help with portion b-3 and c. I have solved the other portions.

We are evaluating a project that costs \$848,000, has an eight-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 62,000 units per year. Price per unit is \$40, variable cost per unit is \$20, and fixed costs are \$636,000 per year. The tax rate is 35 percent, and we require a return of 20 percent on this project.

a. Calculate the accounting break-even point. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Break-even point            units

b-1 Calculate the base-case cash flow and NPV. (Do not round intermediate calculations and round your NPV answer to 2 decimal places, e.g., 32.16.)

 Cash flow \$ NPV \$

b-2
What is the sensitivity of NPV to changes in the sales figure? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)

ΔNPV/ΔQ          \$

b-3 Calculate the change in NPV if sales were to drop by 500 units. (Enter your answer as a positive number. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

NPV would  (Click to select)  increase  decrease  by \$

c. What is the sensitivity of OCF to changes in the variable cost figure? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

ΔOCF/ΔVC          \$

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