Precise Machinery is analyzing a proposed project.The company expects to sell 2,100 units,give or take 5 percent.The expected variable cost per unit is $260 and the expected fixed costs are $589,000.Cost estimates are considered accurate within a plus or minus 4 percent range.The depreciation expense is $129,000.The sales price is estimated at $775 per unit,give or take 2 percent.The tax rate is 34 percent.The company is conducting a sensitivity analysis with fixed costs of $590,000.What is the OCF given this analysis?
A)$337,975
B)$285,350
C)$368,250
D)$374,874
E)$414,350

Question

Quizplus · Accepted Answer

OCF {[($775 - $260) × 2,100] - $590,000} {1 - 0.34} + ($129,000 × 0.34) = $368,250

Precise Machinery Is Analyzing a Proposed Project