Question

Sun Brite has a new pair of sunglasses it is evaluating. The company expects to sell...

Sun Brite has a new pair of sunglasses it is evaluating. The company expects to sell 5,500 pairs of sunglasses at a price of $150 each and a variable cost of $102 each. The equipment necessary for the project will cost $290,000 and will be depreciated on a straight-line basis over the 6-year life of the project. Fixed costs are $160,000 per year and the tax rate is 40 percent. How sensitive is the operating cash flow to a $1 increase in variable costs per pairs of sunglasses?

−$2,970

−$3,667

$2,970

−$3,300

$3,300

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Litchfield Design is evaluating a 3-year project that would involve buying a new piece of equipment...
Litchfield Design is evaluating a 3-year project that would involve buying a new piece of equipment for 160,000 dollars today. The equipment would be depreciated straight-line to 40,000 dollars over 2 years. In 3 years, the equipment would be sold for an after-tax cash flow of 54,000 dollars. In each of the 3 years of the project, relevant revenues are expected to be 137,000 dollars and relevant costs are expected to be 40,000 dollars. The tax rate is 50 percent...
Simpson’s Shoes expects to sell 315 pairs of a certain running shoe in a year. There...
Simpson’s Shoes expects to sell 315 pairs of a certain running shoe in a year. There is a fixed charge of $140 per order and each pair of shoes cost the store $7. It costs the store $8 to store a pair of shoes for a year. Find the inventory cost as a function of ONLY the number of shoes/order. Use methods of Calculus shown recently in class to minimize the inventory costs. Give appropriate units. x=____________________________ r=____________________________ Work-> Minimum...
McGilla Golf is evaluating a new line of golf clubs. The clubs will sell for $1,040...
McGilla Golf is evaluating a new line of golf clubs. The clubs will sell for $1,040 per set and have a variable cost of $470 per set. The company has spent $167,500 for a marketing study that determined the company will sell 52,500 sets per year for seven years. The marketing study also determined that the company will lose sales of 9,900 sets of its high-priced clubs. The high-priced clubs sell at $1,540 and have variable costs of $670. The...
McGilla Golf is evaluating a new line of golf clubs. The clubs will sell for $960...
McGilla Golf is evaluating a new line of golf clubs. The clubs will sell for $960 per set and have a variable cost of $430 per set. The company has spent $147,500 for a marketing study that determined the company will sell 48,500 sets per year for seven years. The marketing study also determined that the company will lose sales of 9,100 sets of its high-priced clubs. The high-priced clubs sell at $1,460 and have variable costs of $590. The...
We are evaluating a project that costs $683988, has a five-year life, and has no salvage...
We are evaluating a project that costs $683988, has a five-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 42400 units per year. Price per unit is $50, variable cost per unit is $22, and fixed costs are $524439 per year. The tax rate is 30%, and we require a return of 18% on this project. Suppose the projections given for price, quantity, variable costs,...
We are evaluating a project that costs $106869, has a seven-year life, and has no salvage...
We are evaluating a project that costs $106869, has a seven-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 4092 units per year. Price per unit is $55, variable cost per unit is $29, and fixed costs are $82782 per year. The tax rate is 38 percent, and we require a 9 percent return on this project. Suppose the projections given for price, quantity, variable...
McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell...
McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $754 per set and have a variable cost of $356 per set. The company has spent $12,305 for a marketing study that determined the company will sell 5,228 sets per year for seven years. The marketing study also determined that the company will lose sales of 933 sets of its high-priced clubs. The high-priced clubs sell at $1,094 and have variable costs of...
McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell...
McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $802 per set and have a variable cost of $416 per set. The company has spent $14,126 for a marketing study that determined the company will sell 5,523 sets per year for seven years. The marketing study also determined that the company will lose sales of 960 sets of its high-priced clubs. The high-priced clubs sell at $1,120 and have variable costs of...
McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell...
McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $834 per set and have a variable cost of $350 per set. The company has spent $19240 for a marketing study that determined the company will sell 5233 sets per year for seven years. The marketing study also determined that the company will lose sales of 941 sets of its high-priced clubs. The high-priced clubs sell at $1125 and have variable costs of...
We are evaluating a project that costs $786,000, has an eight-year life, and has no salvage...
We are evaluating a project that costs $786,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 65,000 units per year. Price per unit is $48, variable cost per unit is $25, and fixed costs are $725,000 per year. The tax rate is 22 percent, and we require a return of 10 percent on this project. Suppose the projections given for price, quantity,...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT