Question
Kenora Industries is analyzing a new project. They have gathered the following data: Worst Case Base Case Best Case Sales quantity 10,000 13,500 17,000 Sales
Kenora Industries is analyzing a new project. They have gathered the following data: Worst Case Base Case Best Case Sales quantity 10,000 13,500 17,000 Sales price per unit $14.00 $16.50 $18.00 Variable cost per unit $6.90 $5.20 $5.60 Fixed cost $15,000.00 $18,000.00 $21,000.00 Initial requirement for equipment: $140,000 Depreciation: Straight-line to zero over the four-year life of the project with no salvage value. Required rate of return: 15% Marginal tax rate: 35% What is the operating cash flow under the base-case scenario? $97,958 $92,438 $89,396 $85,600 $103,101
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