A firm expects to sell 11,500 units. The expected variable cost per unit is $314 and the expected fixed costs are $647,000. The depreciation expense is $187,000. The sales price is estimated at $850 per unit. The tax rate is 21%. What is the operating cash flow based on this analysis?

A firm expects to sell 11,500 units. The expected variable cost per unit is $314 and the expected fixed costs are $647,000. The depreciation expense is $187,000. The sales price is estimated at $850 per unit. The tax rate is 21%. What is the operating cash flow based on this analysis?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 4EB: Assume a company is going to make an investment in a machine of $825,000 and the following are the...

See similar textbooks

Question

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Assume a company is going to make an investment in a machine of $825,000 and the following are the cash flows that two different products would bring. Which of the two options would you choose based on the payback method?
A new firm expects to generate Sales of $124,900. POINT BLANK has variable costs of $77,500, and fixed costs of $18,000. The per-year depreciation is $4,300 and the tax rate is 35 percent. What is the annual operating cash flow?
A project currently generates sales of $17 million, variable costs equal 40% of sales, and fixed costs are $3.4 million. The firm’s tax rate is 30%. Assume all sales and expenses are cash items. a. What are the effects on cash flow, if sales increase from $17 million to $18.7 million? (Input the amount as positive value. Enter your answer in dollars not in millions.) Req cash flow by b. What are the effects on cash flow, if variable costs increase to 45% of sales? (Input the amount as positive value. Enter your answer in dollars not in millions.) Req cash flow by
Calculate the Operating Cash for this Firm:A new firm, GASFORALL, Co expects to generate Sales of $117,700. GASFORALL has variable costs of $74,800, and fixed costs of $15,300. The per-year depreciation is $3,850 and the tax rate is 35 percent. Given this info: What is the annual operating cash flow?
You are analyzing a project and have developed the following estimates: unit sales = 2,150, price per unit = $84, variable cost per unit = $57, fixed costs per year = $13,900. The depreciation is $8,300 a year and the tax rate is 35 percent. What effect would an increase of $1 in the selling price have on the operating cash flow?
A proposed new investment has projected sales of $635,000, Variable Costs are 44% of sales, and Fixed Costs are $193,000, depreciation is $54,000. Prepare a pro-forma income statement assuming a tax rate of .34%. What is the projected EBITDA, what is NET INCOME and OPERATING CASH FLOW
A project currently generates sales of $14 million, variable costs equal 50% of sales, and fixed costs are $28 million. The firm's tax rate is 40%. Assume all sales and expenses are cash items. a. What are the effects on cash flow, if sales increase from $14 million to $15.4 million? (Input the amount as positive value. Enter your answer In dollars not In mllons.) Cash flow increases by s 420,000 b. What are the effects on cash flow, if variable costs increase to 60% of sales? (Input the amount as positive value. Enter your answer In dollars not In mlllons.)
A firm made the following estimates for a project: price per unit = $18, variable cost per unit = $7, fixed cost = $60, and quantity = 25 units. The firm thinks that the actual value of each variable could be as much as 20% higher or lower. Find the operating cash flow in the best-case scenario if depreciation is $120 and the tax rate is 35%.
At an output level of 76,000 units, you calculate that the degree of operating leverage is 3.3. The output rises to 81,000 units. What will the percentage change in operating cash flow be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Will the new level of operating leverage be higher or lower?
A factory costs $970,600. You forecast that it will produce cash inflows of $839,085 in year 1, $85,000 in year 2, and $200,000 in year 3. The discount rate is 15.50%. a. Calculate the PV of cash inflows. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value $ b. Should the company invest in the factor? (Click to select)
Tubby Toys estimates that its new line of rubber ducks will generate sales of $7.20 million, operating costs of $4.20 million, and a depreciation expense of $1.20 million. If the tax rate is 30%, what is the firm's operating cash flow?
The present value of the net cash flows for Product A is $65,145 while the cost of the initial investment is $38,560. The profitability index is