We are evaluating a project that costs $1,422,000, has a six-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 88,200 units per year. Price per unit is $34.85, variable cost per unit is $21.10, and fixed costs are $762,000 per year. The tax rate is 35 percent, and we require a return of 11 percent on this project.
Base Cash Flow = 375937.50
NPV = 168417.824
Given the above information find the:
Sensitivity of NPV
NPV drop
Sensitivity of OCF
Increase in OCF