A project has a seven-year life and an initial investment of $228.700 in equipment. The equipment...

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A project has a seven-year life and an initial investment of $228.700 in equipment. The equipment will be depreciated straight-line to zero over seven years. Fixed costs are $124,600. Variable costs are $8.16 per unit. Sales are estimated at 54,500 units at an average price of $11.99. The estimated ranges of each variable are: sales quantity 15%; sales price ±2%; variable cost ± 10%; and fixed costs ± 4%. The tax rate is 35%. Under the worst-case scenario, what is the operating cash flow? A project has a seven-year life and an initial investment of $228.700 in equipment. The equipment will be depreciated straight-line to zero over seven years. Fixed costs are $124,600. Variable costs are $8.16 per unit. Sales are estimated at 54,500 units at an average price of $11.99. The estimated ranges of each variable are: sales quantity 15%; sales price ±2%; variable cost ± 10%; and fixed costs ± 4%. The tax rate is 35%. Under the worst-case scenario, what is the operating cash flow?

Answer rating: 100% (QA)

To calculate the operating cash flow under the worstcase scenario we need to determine the values fo... View the full answer