Miller Mfg.is analyzing a proposed project.The company expects to sell 8,000 units,plus or minus 4 percent.The expected variable cost per unit is $11 and the expected fixed costs are $290,000.The fixed and variable cost estimates are considered accurate within a plus or minus 5 percent range.The depreciation expense is $68,000.The tax rate is 32 percent.The sales price is estimated at $64 a unit,give or take 3 percent.What is the operating cash flow under the best case scenario?
A)$148,247
B)$148,475
C)$107,146
D)$168,630
E)$174,220

Question

Quizplus · Accepted Answer

OCF_{best case} = {{[($64 × 1.03) - ($11 × 0.95)] × (8,000 × 1.04)} - ($290,000 × 0.95)} {1 - 0.32} + ($68,000 × 0.32) = $148,247