Kenora Industries is analyzing a new project. They have gathered the following data: Worst Case Base Case Best Case Sales quantity 9000 12000 14500 Sales price per unit $10.00 $12.00 $14.00 Variable cost per unit $7.00 $8.00 $8.50 Fixed cost $14,000.00 $16,000.00 $18,000.00 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? $27,000.00 $34,300.00 $31,300.00 $36,900 $26,400.00

Kenora Industries is analyzing a new project. They have gathered the following data: Worst Case Base Case Best Case Sales quantity 9000 12000 14500 Sales price per unit $10.00 $12.00 $14.00 Variable cost per unit $7.00 $8.00 $8.50 Fixed cost $14,000.00 $16,000.00 $18,000.00 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? $27,000.00 $34,300.00 $31,300.00 $36,900 $26,400.00

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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