Question
32- Which of the following is/are generally least subject to forecasting risk? I. Projected sales II. Initial investment III. Projected fixed costs A) I only
32- Which of the following is/are generally least subject to forecasting risk?
I. Projected sales
II. Initial investment
III. Projected fixed costs
A) I only
B) II only
C) III only
D) I and II only
E) I, II and III
35- The managers of XYZ Inc. plan to manufacture semi-conductors for cars. They expect to sell 200 semi-conductors annually for the next five years. The initial investment will cost a total of $800,000 and will be depreciated using the MACRS three-year class. The firm expects to be able to sell the manufacturing equipment for $200,000 at the end of the project. Labour and materials costs total $500 per semi-conductors, fixed costs are $125,000 per year and auto plants will pay $3,000 retail per semi-conductors. Assume a 35% tax rate and a 12% discount rate. What is the cash flow for the project in year 1?
A) $97,500
B) $449,432
C) $337,074
D) $203,996
E) $418,324
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