A.

Which one of the following should NOT be included as an incremental cash flow for a proposed project?

sunk cost

opportunity cost

side effect

change in net working capital

B.

A project has projected sales of $62,000, costs of $48,000, depreciation expense of $6,200, and a tax rate of 34 percent. What is the operating cash flow for this project?

$5,148

$12,207

$6,207

$11,348

C.

Newton Industries is considering a project that is expected to produce sales of $436,000 a year for three years and have a profit margin of 3.5 percent. The project requires an initial investment of $54,500 in fixed assets which will be depreciated on a straight-line basis to zero over the life of the project. The project is expected to increase accounts receivable by $15,650, decrease accounts payable by $10,000, and decrease inventory by $8,100. What is the project's cash flow at time zero if the tax rate is 34 percent?

$72,050

$56,950

$68,250

$52,050