Sensitivity of ocf to changes in the variable cost figure

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Reference no: EM131625257

We are evaluating a project that costs $768,000, 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 57,000 units per year. Price per unit is $60, variable cost per unit is $35, and fixed costs are $768,000 per year. The tax rate is 35 percent, and we require a return of 15 percent on this project.

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.)

Reference no: EM131625257

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