Question

Consider a four-year project with the following information: initial fixed asset investment = $474797; straight-line depreciation to zero over the four-year life; zero salvage value; price = $32; variable costs = $22; fixed costs = $193539; quantity sold = 78542 units; tax rate = 34 percent. Calculate the sensitivity of the OCF to changes in the quantity sold.

[Hint: Think of this as, "How much does OCF change if we can sell one more unit each year?"]

(Do not round intermediate calculations and round your final answer to 2 decimal places. Omit the "$" sign and commas in your response. For example, $1.2345 should be entered as 1.23.)