Question
A project has projected sales of 25,600 units with a selling price of $4.95 each. Annual fixed costs are $31,000 with variable costs of $2.18
A project has projected sales of 25,600 units with a selling price of $4.95 each. Annual fixed costs are $31,000 with variable costs of $2.18 per unit. The project has a three-year life and requires an initial investment of $62,900 for equipment. The equipment will be depreciated straight-line to zero over three years. The sales price has a plus-minus range of 10% while the cost estimates are expected to vary within a 5% range. The quantity has a plus-minus range of 8%. The tax rate is 34%. Under the best-case scenario, what is the operating cash flow?
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