Sensitivity of the ocf to changes in quantity sold

Assignment Help Financial Management

Reference no: EM131541411

Consider a four-year project with the following information: initial fixed asset investment = $506527; straight-line depreciation to zero over the four-year life; zero salvage value; price = $35; variable costs = $23; fixed costs = $187966; quantity sold = 78338 units; tax rate = 32 percent. Calculate the sensitivity of the OCF to changes in the quantity sold.

Reference no: EM131541411

Questions Cloud

One common method to determine the discount rate : One common method to determine the discount rate, or rate of return that investors require, is the build-up method.

Earnings growth comes from investment of retained earning : Assume? Halliford's share count remains constant and all earnings growth comes from the investment of retained earnings.

Type of valuation may be susceptible to psychological effect : some of the assumptions used in selecting both the method or type of valuation may be susceptible to psychological effects.

Forward rate is used as a forecast : Assume that interest rate parity holds. What is the approximate 10-year forecast of the peso’s spot rate if the 10-year forward rate is used as a forecast?

Sensitivity of the ocf to changes in quantity sold : Calculate the sensitivity of the OCF to changes in the quantity sold.

When projecting growing cash flows into perpetuity : When projecting growing cash flows into perpetuity,

Cause firm to have higher price-earnings ratio : Which one of the following is most apt to cause a firm to have a higher price-earnings ratio?

The net present value of a project is equal to the : The net present value of a project is equal to the:

What is our investor tax on the exchange : What is our investor's tax on the exchange?

User Account

All Pages