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1. 2. Suncas is analyzing a proposed 3-year project using standard sensitivity analysis. The company expects to sell 20,000 units, A+4 percent. The expected variable
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Suncas is analyzing a proposed 3-year project using standard sensitivity analysis. The company expects to sell 20,000 units, A+4 percent. The expected variable cost per unit is $12 and the expected fixed costs are $70,000. The fixed and variable cost estimates are considered accurate within a u5 percent range. The sales price is estimated at $18 a unit, A+5 percent. The project requires an initial investment of $ 192,000 for equipment that will be depreciated using the straight-line method to zero over the project's life. The equipment can be sold for $45,000 at the end of the project. The project requires $20,000 in net working capital for the three years. The discount rate is 10% percent and tax rate is 25 percent. What is the operating cash flow under the optimistic case scenario? O $73,250 $96,128 O $79,101 $89,247 $83,125 Abbey Company has compiled this information related to a new project: Initial investment: $460,000; Fixed costs: $256,000: Variable costs: $16 per unit: Selling price: $40 per unit; Discount rate: 13 percent; Project life: 5 years: Tax rate: 25 percent. Fixed assets are depreciated using straight-line depreciation over the project's life. What is the financial break-even point? 18,547 O 18,018 0 17,520 17,008 16,655Step by Step Solution
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