Consider a 5-year project with an initial fixed asset


Consider a 5-year project with an initial fixed asset investment of $350,000, straight-line depreciation to zero over the project’s life, a zero salvage value, a selling price of $29, variable costs of $21, fixed costs of $139,700, a sales quantity of110,000 units, and a tax rate of35 percent. What is the sensitivity of OCF to changes in quantity sold?

A. $5.20 per unit

B. $6.16 per unit

C. $3.38 per unit

D. $8.33 per unit

E. $7.54 per unit

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Financial Management: Consider a 5-year project with an initial fixed asset
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