Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Haverhill, Inc. is analyzing a proposed 3-year project using standard sensitivity analysis. The company expects to sell 10,000 units, 4 percent. The expected variable cost

Haverhill, Inc. is analyzing a proposed 3-year project using standard sensitivity analysis. The company expects to sell 10,000 units, 4 percent. The expected variable cost per unit is $6 and the expected fixed costs are $32,000. The fixed and variable cost estimates are considered accurate within a 5 percent range. The sales price is estimated at $15 a unit, 6 percent. The project requires an initial investment of $144,000 for equipment that will be depreciated using the straight-line method to zero over the project's life. The equipment can be sold for $25,000 at the end of the project. The project requires $13,500 in net working capital for the three years. The discount rate is 14 percent and tax rate is 34 percent. What is the operating cash flow in year 2 under the optimistic case scenario?

$74,865.47

$70,436.12

$66,268.80

$62,211.88

$59,605.34

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Asia Bond Monitor June 2016

Authors: Asian Development Bank

1st Edition

9292574930,9292574949

More Books

Students also viewed these Finance questions

Question

3. Describe in detail the process of listening.

Answered: 1 week ago