A 7-year project is expected to generate annual sales of 10,400 units at a price of...

A 7-year project is expected to generate annual sales of 10,400 units at a price of $91 per unit and a variable cost of $62 per unit. The equipment necessary for the project will cost $437,000 and will be depreciated on a straight-line basis over the life of the project. Fixed costs are $265,000 per year and the tax rate is 35 percent. How sensitive is the operating cash flow to a $1 change in the per unit sales price?

Solutions

Expert Solution

jeff jeffy answered 6 months ago

Next > < Previous

Related Solutions

A 5-year project is expected to generate annual sales of 9,600 units at a price of $83 per

A 5-year project is expected to generate annual sales of 9,600 units at a price of $83 per unit and a variable cost of $54 per unit. The equipment necessary for the project will cost $373,000 and will be depreciated on a straight-line basis over the life of the project. Fixed costs are $225,000 per year and the tax rate is 22 percent. How sensitive is the operating cash flow to a $1 change in the per unit sales price?

A 10-year project is expected to generate annual sales of $262100, variable costs of $40543, and...

A 10-year project is expected to generate annual sales of $262100, variable costs of $40543, and fixed costs of $49005. The annual depreciation is $23639 and the tax rate is 27 percent. What is the annual operating cash flow Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

ABC Company is considering a new project. The project is expected to generate annual sales of...

ABC Company is considering a new project. The project is expected to generate annual sales of $65476, variable costs of $18689, and fixed costs of $9650. The depreciation expense each year is $10884 and the tax rate is 25 percent. What is the annual operating cash flow? Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer...

A 7-year project is expected to provide annual sales of $153,000 with costs of $89,000. The...

A 7-year project is expected to provide annual sales of $153,000 with costs of $89,000. The equipment necessary for the project will cost $275,000 and will be depreciated on a straight-line method over the life of the project. You feel that both sales and costs are accurate to +/-10 percent. The tax rate is 40 percent. What is the annual operating cash flow for the worst-case scenario? a)50994 b)39594 c)68634 d)23880 e)31634

A new project is expected to generate annual sales of $74 million, annual expenses of $42...

A new project is expected to generate annual sales of $74 million, annual expenses of $42 million, and an annual depreciation expense of $10 million. The firm's tax rate is 35%. Calculate the OCF (Operating Cash flow) for the year by using any of the three methods discussed in the chapter 9

Project P costs $10,400 and is expected to produce cash flows of $3,650 per year for...

Project P costs $10,400 and is expected to produce cash flows of $3,650 per year for five years. Project Q costs $30,000 and is expected to produce cash flows of $9,250 per year for five years. a. Calculate the NPV, IRR, MIRR, and traditional payback period for each project, assuming a required rate of return of 8 percent. b. If the projects are independent, which project(s) should be selected? If they are mutually exclusive, which project should be selected?

a project with an initial cost of $73,600 is expected to generate annual cash flows of...

a project with an initial cost of $73,600 is expected to generate annual cash flows of $16,360 for the next 8 years. what is the projects internal rate of retu

19) A firm is considering a project that is expected to generate annual cash flows of...

19) A firm is considering a project that is expected to generate annual cash flows of $24,000 for 15 years. The project requires an initial investment of $247,103.44. The cost of capital is 8.13%. What is the IRR of the project?

An investment project requires an initial outlay of $100,000, and is expected to generate annual cash...

An investment project requires an initial outlay of $100,000, and is expected to generate annual cash inflows of $28,000 for the next 5 years. The cost of capital is 12 percent. Determine the internal rate of return for the project (to the nearest tenth of one percent). a. 12.0% b. 12.6% c. 3.6% d. 12.4%

Subjects