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Consider a 2-year project

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Consider a 2-year project with the following information: initial fixed asset investment = $495,000; straight line depreciation to zero over the 2-year life; zero salvage value; selling price = $39; variable costs = $20; fixed costs = $210,000; quantity sold = 150,000 units; tax rate = 31 percent. How sensitive is Operating Cash Flow (OCF)to changes in quantity sold? State your answer in terms of a dollar amount change (increase or decrease) in OCF for every additional unit sold.

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This solution is comprised of a detailed explanation to answer how sensitive is Operating Cash Flow (OCF)to changes in quantity sold.

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Finance Question: Capital Budgets
Consider a 2-year project with the following information: initial fixed asset investment = $495,000; straight line depreciation to zero over the 2-year life; zero salvage value; selling price = $39; variable costs = $20; fixed costs = $210,000; quantity sold = 150,000 units; tax rate = 31 percent. How sensitive is Operating ...

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