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We are evaluating a project that costs $838264, 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 56118 units per year. Price per unit is $35, variable cost per unit is $21, and fixed costs are $424690 per year. The tax rate is 35%, and we require a return of 22% on this project.
In percentage terms, what is the sensitivity of OCF to changes in the variable cost per unit projection? (Round answer to 2 decimal places. Do not round intermediate calculations)
How do you arrive at this answer??
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