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Consider a 3 year project with the following information: Initial fixed asset investment=$770,000; straight line depreciation to zero over the 3 year life; zero salvage value; price =$34.99; variable costs=$23.16; fixed costs=$245,000; quantity sold=94,500 units; tax rate=35%. How sensitive is OCF to an increase of one unit in the quantity sold?

a. $7.69
b. $8.38
c. $8.67
d. $9.97
e. $11.83

 

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