We are evaluating a project that costs $907,000, has an 14-year life, and has no salvagevalue. Assume that depreciation is straight-line to zero over the life of the project. Salesare projected at 94,000 units per year. Price per unit is $42, variable cost per unit is $22,and fixed costs are $916,070 per year. The tax rate is 35 percent, and we require a 10percent return on this project. (a)Calculate the accounting break-even point. (Do not round your intermediatecalculations.)|(Click to select) ♥(b)What is the degree of operating leverage at the accounting break-even point? (Do notround your intermediate calculations.)|(Click to select) ♥Requirement 2: Base-Case & NPV Sensitivity(a)Calculate the base-case operating cash flow. (Do not round your intermediatecalculations.)|(Click to select) ♥(b)Calculate the base-case NPV. (Do not round your intermediate calculations.)|(Click to select) ♥(c) What is the sensitivity/elasticity of NPV to changes in the sales figure?Recall from your economics class that an elasticity measures a percentage change inone variable due to a percentage change in another. So simply increase salesquantity by 1 percent, calculate the new NPV, and then calculate the percentagechange in the NPV. (Do not round your intermediate calculations.)(Click to select) v

Solution 1- A Sales = 94000 units Fixed cost =916070 Contribution per unit= sales unit - variable…

Answered: We are evaluating a project that costs…

We are evaluating a project that costs $907,000, has an 14-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 5P

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