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problem: Consider a two year project with the following data: 

Initial fixed asset investment= $495,000; 

A straight-line depreciation to zero over the 2 year life; 

Salvage value= 0; 

Selling price =$39; 

Variable costs =$20; 

Fixed costs =$210,000; 

Quantity sold =150,000 units; 

Tax rate =31%

How sensitive is Operating Cash Flow (OCF) to changes in the quantity sold? Give your answer in terms of dollar amount change [increase or decrease] in Operating Cash Flow for every additional unit sold.

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  • Category:- Basic Finance
  • Reference No.:- M920314

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