The Meldrum Co. is analyzing a proposed project. The company expects to sell 3,000 units, give or take 15%. The expected variable cost per unit is $8 and the expected fixed costs are $12,500. Cost estimates are considered accurate within a plus or minus 5% range. The depreciation expense is $4,000. The sale price is estimated at $18/unit, give or take 2%. The project requires $24,000 of fixed assets which will be worthless when the project ends in six years. Also required is $6,500 of net working capital for the life of the project. The tax rate is 34% and the required rate of return is 12%. What is the net present value of the worst-case scenario?
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- Chesapeake Yachting Gear is analyzing a proposed project. The company expects to sell 6,000 units, plus or minus 3 percent. The expected variable cost per unit is $11 and the expected fixed costs are $158,000. The fixed and variable cost estimates are considered accurate within a plus or minus 4 percent range. The depreciation expense is $68,000. The tax rate is 30 percent. The sales price is estimated at $64 a unit, give or take 2 percent. What is the operating cash flow under the best case scenario? Group of answer choices $86,228 $100,610 $116,440 $137,503 $150,943The Can-Do Co. is analyzing a proposed project. The company expects to sell 12,000 units, give or take 4 percent. The expected variable cost per unit is 7 and the expected fixed cost is 36,000. The fixed and variable cost estimates are considered accurate within a plus or minus 6 percent range. The depreciation expense is 30,000. The tax rate is 34 percent. The sale price is estimated at 14 a unit, give or take 5 percent. What is the contribution margin for a sensitivity analysis using a variable cost per unit of 8?You are evaluating a product for your company. You estimate the sales price of the product to be $200 per unit and sales volume to be 2,000 units in year 1; 5,000 units in year 2; and 1,000 units in year 3. The project has a three-year life. Variable costs amount to $75 per unit and fixed costs are $200,000 per year. The project requires an initial investment of $360,000 in assets that will be depreciated straight-line to zero over the three-year project life. The actual market value of these assets at the end of year 3 is expected to be $40,000. NWC requirements at the beginning of each year will be approximately 20 percent of the projected sales during the coming year. The tax rate is 21 percent and the required return on the project is 13 percent. What will the year 2 free cash flow for this project be? Multiple Choice $170,412 $192,500 $201,300 $520,950
- You are evaluating a product for your company. You estimate the sales price of product to be $240 per unit and sales volume to be 11,400 units in year 1; 26,400 units in year 2; and 6,400 units in year 3. The project has a 3 year life. Variable costs amount to $165 per unit and fixed costs are $214,000 per year. The project requires an initial investment of $366,000 in assets which will be depreciated straight-line to zero over the 3 year project life. The actual market value of these assets at the end of year 3 is expected to be $54,000. NWC requirements at the beginning of each year will be approximately 13% of the projected sales during the coming year. The tax rate is 21% and the required return on the project is 8%. What will the year 2 free cash flow for this project be? Multiple Choice $1,298,760 $1,644,000 $796,760 $1,420,760You are evaluating a project for your company. You estimate the sales price to be $380 per unit and sales volume to be 4,800 units in year 1; 5,800 units in year 2; and 4,300 units in year 3. The project has a three-year life. Variable costs amount to $230 per unit and fixed costs are $240,000 per year. The project requires an initial investment of $255,000 in assets which will be depreciated straight-line to zero over the three-year project life. The actual market value of these assets at the end of year 3 is expected to be $48,000. NWC requirements at the beginning of each year will be approximately 13 percent of the projected sales during the coming year. The tax rate is 30 percent and the required return on the project is 9 percent. What is the operating cash flow for the project in year 2? Multiple Choice $517,500 $381,500 $466,500 $545,000You are evaluating a product for your company. You estimate the sales price of product to be $150 per unit and sales volume to be 10,500 units in year 1; 25,500 units in year 2; and 5,500 units in year 3. The project has a 3 year life. Variable costs amount to $75 per unit and fixed costs are $205,000 per year. The project requires an initial investment of $339,000 in assets which will be depreciated straight-line to zero over the 3 year project life. The actual market value of these assets at the end of year 3 is expected to be $45,000. NWC requirements at the beginning of each year will be approximately 15% of the projected sales during the coming year. The tax rate is 21% and the required return on the project is 12%. What will the year 2 free cash flow for this project be? Multiple Choice A. $922,655 B. $1,372,655 C. $1,594,500 D. $1,259,655
- You are evaluating a product for your company. You estimate the sales price of product to be $150 per unit and sales volume to be 10,500 units in year 1; 25,500 units in year 2; and 5,500 units in year 3. The project has a 3 year life. Variable costs amount to $75 per unit and fixed costs are $205,000 per year. The project requires an initial investment of $339,000 in assets which will be depreciated straight-line to zero over the 3 year project life. The actual market value of these assets at the end of year 3 is expected to be $45,000. NWC requirements at the beginning of each year will be approximately 15% of the projected sales during the coming year. The tax rate is 21% and the required return on the project is 12%. What will the year 2 free cash flow for this project be?You are evaluating a project for your company. You estimate the sales price to be $580 per unit and sales volume to be 2,800 units in year 1; 3,800 units in year 2; and 2,300 units in year 3. The project has a three-year life. Variable costs amount to $380 per unit and fixed costs are $240,000 per year. The project requires an initial investment of $365,000 in assets which will be depreciated straight-line to zero over the three-year project life. The actual market value of these assets at the end of year 3 is expected to be $58,000. NWC requirements at the beginning of each year will be approximately 25 percent of the projected sales during the coming year. The tax rate is 21 percent and the required return on the project is 9 percent. What change in NWC occurs at the end of year 1? Multiple Choice A. $114,550 B. $145,000 C. $333,500 D. $263,465You are evaluating a project for your company. You estimate the sales price to be $520 per unit and sales volume to be 2,200 units in year 1; 3,200 units in year 2; and 1,700 units in year 3. The project has a three-year life. Variable costs amount to $320 per unit and fixed costs are $210,000 per year. The project requires an initial investment of $335,000 in assets which will be depreciated straight-line to zero over the three-year project life. The actual market value of these assets at the end of year 3 is expected to be $52,000. NWC requirements at the beginning of each year will be approximately 20 percent of the projected sales during the coming year. The tax rate is 21 percent and the required return on the project is 10 percent. What change in NWC occurs at the end of year 1? $104,000 $139,672 $82,160 $176,800
- Eton Company is analysing a proposed project. It expects to sell 150 units, give or take 4%. The expected variable cost per unit is $10 and the expected fixed cost is $400. The fixed and variable cost estimates are considered accurate within a plus or minus 5% range. The depreciation expense and interest expense are $300 and $100 respectively. The tax rate is 10%. The sale price is estimated at $20 a unit, give or take 5%. What is the after tax cash flow under the optimistic case scenario? A. $1002.6 B. $1114.0C. $1302.6 D. $1272.6Appalachian Crafts is analyzing a project with expected sales of 18,900 units, ±2 percent. The expected variable cost per unit is $23 and the expected fixed costs are $52,000. Cost estimates are considered accurate within a range of ±1 percent. The depreciation expense is $18,400. The sale price is estimated at $54 a unit, ±2 percent. What is the total dollar difference between the revenue using the optimistic sale price versus the expected sale price?You are evaluating a project for a superior pickleball paddle. You estimate the sales price to be $200 per unit and sales volume to be 1,000 units in year 1; 1,200 units in year 2; and 1,100 units in year 3. The project has a three-year life. Variable costs amount to $50 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $165,000 in assets, which will be depreciated using bonus depreciation. The actual market value of these assets at the end of year 3 is expected to be $20,000. NWC requirements at the beginning of each year will be approximately 20 percent of the projected sales during the coming year. If the company invests in the project, it plans to increase dividends by $10,000 each year. The tax rate is 21 percent and the required return on the project is 10 percent. Prepare a schedule of project cash flows by year. Clearly label the rows showing EBIT, OCF and Free (Total) Cash Flows. Compute the project's NPV and IRR. Do you…