1. A project costs $2.43 million and has no salvage value. Depreciation is straight-line to zero over the five-year life of the project. Sales are projected at 64,000 units per year, price per unit is $73.29, variable cost per unit is $42.93, and fixed costs are $623,000 per year. The tax rate is 35 percent, and the required rate of return is 11percent. What is the sensitivity of NPV to a 100-unit increase in the sales figure?
A. $9,198.40
B. $8,609.18
C. $8,097.40
D. $7,293.48
E. $7,557.12
2. The Outpost currently sells short leather jackets for $369 each. The firm is considering selling long coats also. The long coats would sell for $719 each and the company expects to sell 820 a year. If the company decides to carry the long coat, management feels that the annual sales of the short jacket will decline from 1,120 to 1,040 units. Variable costs on the jacket are $228 and $435 on the long coat. The fixed costs for this project are $23,100, depreciation is $10,400 a year, and the tax rate is 34 percent. What is the projected operating cash flow for this project?
A. $134,546
B. $131,264
C. $112,212
D. $131,062
E. $128,749
3. A cost-cutting project will decrease costs by $37,400 a year. The annual depreciation on the project's fixed assets will be $4,700 and the tax rate is 34 percent. What is the amount of the change in the firm's operating cash flow resulting from this project?
A. $21,582
B. $26,791
C. $25,805
D. $23,610
E. $26,282
4. Cinram Machines has the following estimates for its new gear assembly project: price = $1,870 per unit; variable costs = $949 per unit; fixed costs = $1.4 million; quantity = 42,000 units. Suppose the company believes all of its estimates are accurate only to within ± 3 percent. What value should the company use for its total variable costs when performing its best-case scenario analysis?
A. $38,578,064
B. $39,822,128
C. $38,216,051
D. $41,802,137
$40,864,538
5. An all-equity firm has net income of $46,420, depreciation of $3,758, and taxes of $23,915. What is the firm's operating cash flow?
A. $47,850
B. $51,950
C. $46,250
D. $50,178
E. $46,750
6. A project has an annual operating cash flow of $52,620. Initially, this four-year project required $5,160 in net working capital, which is recoverable when the project ends. The firm also spent $39,700 on equipment to start the project. This equipment will have a book value of $17,014 at the end of Year 4. What is the cash flow for Year 4 of the project if the equipment can be sold for $15,900 and the tax rate is 35 percent?
A. $63,749.90
B. $73,680.00
C. $74,069.90
D. $73,862.00
E. $73,290.10
7. A stock produced returns of 14 percent, 17percent, and -1 percent over three of the past four years, respectively. The arithmetic average for the past four years is 6 percent. What is the standard deviation of the stock's returns for the four-year period?
A. 11.63 percent
B. 15.94 percent
C. 9.70 percent
D. 6.25 percent
E. 11.23 percent
8. Windsor stock has produced returns of 13.8 percent, 11.7 percent, 2.3 percent, -21.4 percent, and 8.9 percent over the past five years, respectively. What is the variance of these returns?
A. .020574
B. .031947
C. .035682
D. .019515
E. .020016