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Question

We are evaluating a project that costs $837419, has an eight-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 58046 units per year. Price per unit is $37, variable cost per unit is $16, and fixed costs are $420001 per year. The tax rate is 35%, and we require a return of 21% on this project.

In percentage terms, what is the sensitivity of OCF to changes in the variable cost per unit projection?Answer -1.09 Please show all work so I can see where I am off in my calculations

 
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