Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Assume a project has a sales quantity of 7,500 units, +3 percent and a sales price of $60 a unit, +2 percent. The expected variable
Assume a project has a sales quantity of 7,500 units, +3 percent and a sales price of $60 a unit, +2 percent. The expected variable cost per unit is $10, +2 percent, and the expected fixed costs are $200,000, +3 percent. The depreciation expense is $60,000 and the tax rate is 21 percent. What is the operating cash flow under the worst-case scenario? A. $119,499.1 B. $109,275.2 C. $129,176.4 D. $268,975.5 E. $64,994.8 Erica is considering a project that will produce cash inflows of $2,999 a year for 3 years. The required rate of return is 15 percent and the initial cost is $6,800. What is the discounted payback period? A. 2.98 years B. 1.98 years C. 2.56 years D. 1.69 years E. Never Atlas Manufacturing purchased a new computer system in 2018 at a cost of $480,000 for a project. This system falls in the 5-year MACRS class that has depreciation allowance percentages of 20, 32, 19.2, 11.52, 11.52, and 5.76. The required return is 12 percent and the tax rate is 30 percent. What is the value of the depreciation tax shield in Year 2 of the project? A. $46,080 OB. $21,428 C. $36,800 D. $28,800 E. $54,400
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started