Question
EdgeLab is analyzing a proposed 3-year project using standard sensitivity analysis. The company expects to sell 18,000 units, 4 percent. The expected variable cost per
EdgeLab is analyzing a proposed 3-year project using standard sensitivity analysis. The company expects to sell 18,000 units, 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 5 percent range. The sales price is estimated at $18 a unit, 5 percent. The project requires an initial investment of $180,000 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 13% percent and tax rate is 25 percent. What is the operating cash flow under the optimistic case scenario?
$70,425.00
$76,304.00
$82,915.00
$88,478.00
$94,485.00
Please show all work
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