Question

The variable cost per unit for a proposed project is $8.48 and the annual fixed costs...

The variable cost per unit for a proposed project is $8.48 and the annual fixed costs are $27,400. These costs can vary by ± 5 percent. Annual depreciation is $13,290 and the tax rate is 21 percent. The sale price is $13.29 a unit, ± 2 percent. If the firm bases its sensitivity analysis on the expected outcome, what will be the operating cash flow for a sensitivity analysis of 9,200 units?

A. $14,066.02

B. $11,554.50

C. $22,078.40

D. $18,385.60

E. $16,103.98

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Answer #1

Calculate the operating cash flow as follows:

Therefore, the operating cash flow is $16,103.98.

Formulas:

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