How sensitive is ocf to changes in quantity sold

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Reference no: EM131854326

Consider a five-year project with the following information: initial fixed asset investment = $600,000; straight-line depreciation to zero over the five-year life; zero salvage value; price = $40/unit; variable costs = $18/unit; fixed costs = $370,000 per year; quantity sold = 100,000 units per year; tax rate = 34%. How sensitive is OCF to changes in quantity sold (i.e., the change in OCF given an increase of one unit sold in a year)?

Reference no: EM131854326

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