We are evaluating a project that costs $520,000, has a five-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 73,000 units per year. price per unit is $50, variable cost per unit is $30, and fixed costs are $832,000 per year. the tax rate is 35 percent, and we require a return of 10 percent on this project.

a. calculate the break even point.

b-1. calculate the base case cash flow and npv rounding to 2 decimal places.

b-2. what is the sensitivity of npv to changes in the sales figure? (npv/q)

b-3. calculate the change in npv if sales were to drop by 500 units.

c. what is the sensitivity of ocf to changes in the variable cost figure? (ocf/vc)

Most economists report the elasticity of demand asa. the absolute value of the actual number. b. a negative number, since price and quantity demanded move in opposite directions. c. a percentage, since both the numerator and denominator are percentages. d. a dollar amount, since we are measuring the change in price.

German brothels recently began offering a monthly subscription service for multiple purchasers. if you thought that the brothels' encouragement of prostitution was immoral to begin with, would you consider this pricing plan to be even more immoral? suppose a particular patron at a german brothel has the following willingness-to-pay schedule for services at the brothel, per session. session willingness to pay 1st $84 2nd $72 3rd $60 4th $48 5th $36 6th $24 suppose this consumer would not demand any more sessions, even for free. also assume that the marginal cost to the brothel, per session, is constant at $12. at a price of $78.00 per session, the number of sessions demanded by this consumer would be . at this price and quantity, consumer surplus is $ and producer surplus is $ . suppose the brothel has devised a new pricing scheme for consumers who demand more than 1 session. this pricing scheme is a subscription service, whereby consumers can pay a flat fee of $259.20 and can have up to 6 sessions total. using this subscription pricing model, this consumer would demand sessions. under this scenario, consumer surplus is $ and producer surplus is $ . (hint: for consumer surplus, consider how much total value the consumer places on all sessions, versus the total price paid.)

Where are subduction zones most likely to form