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Magellen Industries is analyzing a new project. The data they have gathered to date is as...

Magellen Industries is analyzing a new project. The data they have gathered to date is as follows:

Lower Bound Expected Value Upper Bound
Sales quantity 9500 10000 10500
Sales price per unit $9.75 $10.00 $10.25
Variable cost per unit $4.80 $5.20 $5.60
Fixed cost $15,000.00 $18,000.00 $21,000.00



Initial requirement for equipment: $120,000
Depreciation: Straight-line to zero over the four-year life of the project with no salvage value.
Required rate of return: 15%
Marginal tax rate: 35%

What is the operating cash flow under the base-case scenario?

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Answer #1

What is the operating cash flow under the base-case scenario?
=(10000*(10-5.20)-18000-120000/4)*(1-35%)+120000/4
=30000.00

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