Consider a three-year project with the following information: initial fixed asset investment = $347,600; straight-line depreciation to zero over the three-year life; zero salvage value; price per unit = $49.99; variable costs per unit = $30.82; fixed costs per year $187,000; quantity sold per year = 65,500 units; tax rate= 35 percent. How sensitive is OCF to an increase of one unit in the quantity sold?
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- Roberts Company is considering an investment in equipment that is capable of producing more efficiently than the current technology. The outlay required is 2,293,200. The equipment is expected to last five years and will have no salvage value. The expected cash flows associated with the project are as follows: Required: 1. Compute the projects payback period. 2. Compute the projects accounting rate of return. 3. Compute the projects net present value, assuming a required rate of return of 10 percent. 4. Compute the projects internal rate of return.Consider a project with a life of 9 years with the following information: initial fixed asset investment = $340,000; straight-line depreciation to zero over the 9-year life; zero salvage value; price = $39; variable costs = $13; fixed costs = $176,800; quantity sold = 79,560 units; tax rate = 23 percent. How sensitive is OCF to changes in quantity sold?Consider a four-year project with the following information: Initial fixed asset investment = $575,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $29; variable costs = $19; fixed costs = $235,000; quantity sold = 76,000 units; tax rate = 21 percent. How sensitive is OCF to changes in quantity sold
- Consider a four-year project with the following information: Initial fixed asset investment = $565,000; straight-line depreciation to zero over the four-year life; zero salvage value; price $39; variable costs $24; fixed costs $240,000; quantity sold = 85,000 units; = tax rate 21 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) AOCF/AQA five-year project has an initial fixed asset investment of $345,000. an initial NWC investment of $25,000, and an annual OCF of -$41,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 11percent, what is this project's equivalent annual cost, or EAC? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Equivalent annual costConsider a four-year project with the following information: Initial fixed asset investment = $560,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $28; variable costs = $20; fixed costs = $200,000; quantity sold = 86,000 units; tax rate = 35 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places,
- Assume a project has estimated fixed costs of $61,200, variable costs per unit of $84.29, a selling price of $199, and an initial cost of $402,000 for fixed assets. Depreciation is straight-line to zero over the project’s 4-year life. The tax rate is 30 percent, and the discount rate is 12 percent. What is the financial breakeven point?An investment has an initial cost of $3.2 million. This investment will be depreciated by $900,000 a year over the 3-year life of the project. Should this project be accepted based on the average accounting rate of return if the required rate is 10.5 percent? Why or why not? Net Income $211.700 186.400 Year 165,500 O Yes; because the AAR is 10.5 percent O Yes; because the AAR is less than 10.5 percent O Yes; because the AAR is greater than 10.5 percent O No; because the AAR is greater than 10.5 percent O No; because the AAR is less than 10.5 percentA new project has an initial cost of $250,000. The equipment will be depreciated on a straight-line basis to a zero book value over the five-year life of the project. The projected net income each year is $13,250, $18,000, $20,240, $15,150, and $11,900, respectively. What is the average accounting return? Multiple Choice 11.52% 8.95% 13.46% 12.57% 5.33%
- You are considering the following project. What is the NPV of the project? WACC of the project: 0.10 Revenue growth rate: 0.05 Tax rate: 0.40 Revenue for year 1: 13,000 Fixed costs for year 1: 3,000 variable costs (% of revenue): 0.30 project life: 3 years Economic life of equipment: 3 years Cost of equipment: 20,000 Salvage value of equipment: 4,000 Initial investment in net working capital: 2,000A five-year project has an initial fixed asset investment of $360, 000, an initial NWC investment of $40,000, and an annual OCF of -$39,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 12 percent, what is this project's equivalent annual cost, or EAC? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Equivalent annual cost $Given the following information, what is the financial break-even point? Initial investment = $250,000; variable cost = $95; fixed cost = $58,000; price = $130; life = 6 years; required return = 12%; SL depreciation; before-tax salvage value of assets = $28,000; initial net working capital investment = $35,000, and tax rate is 21%. Correct answer needed.