Question

In: Advanced Math

Widgets is considering a new investment that has a projected unit sales in year 1 of...

Widgets is considering a new investment that has a projected unit sales in year 1 of 1000 units. sales price per unit is $80, variable costs are 60% of sales, and fixed costs are $200,000 depreciation is 75,000 and the tax rate is 21%

what is the projects operating cash flow for year 1?

what is the depreciation tax shield in year 1?

how sensitive is the operating cash flow to a $1 change in per unit sales price

you feel that both sales and variable costs are accurate to +/- 15% what is the annual operating cash flow?

The last part of the question states "You feel that both sales and variable costs are accurate -/+ 15%. What is the annual operating cash flow for the best-case scenario?" I'm not certain on what to do with the variable costs, but I am sure that sales go up 15% from the 1000. does this imply that variable costs go down 15% from 60% or the number that is calculated after sales

All figures are correct. which is why im running into issues i think im doing it correctly but I have no idea on the answers.

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