Problem:
Consider a four-year project with the following information: initial fixed asset investment = $590,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $34; variable costs = $26; fixed costs = $230,000; quantity sold = 89,000 units; tax rate = 35 percent.
Required:
Question: How sensitive is OCF to changes in quantity sold?
Note: Please explain comprehensively and give step by step solution.