How sensitive is the operating cash flow to a 1 change in


Sun Brite has a new pair of sunglasses it is evaluating. The company expects to sell 6,300 pairs of sunglasses at a price of $158 each and a variable cost of $110 each. The equipment necessary for the project will cost $330,000 and will be depreciated on a straight-line basis over the 6-year life of the project. Fixed costs are $240,000 per year and the tax rate is 35 percent. How sensitive is the operating cash flow to a $1 change in variable costs per pairs of sunglasses?

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Financial Management: How sensitive is the operating cash flow to a 1 change in
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