Question

Precise Machinery is analyzing a proposed project. The company expects to sell 7,500 units, 10 percent. The expected variable cost per unit is $314 and the expected fixed costs are $647,000. Cost estimates are considered accurate within a 4 percent range. The depreciation expense is $187,000. The sales price is estimated at $849 per unit, give or take 2 percent. The tax rate is 21 percent. The company is conducting a sensitivity analysis on the sales price using a sales price estimate of $850. What is the operating cash flow based on this analysis?

A) $2,703,940

B) $2,293,089

C) $1,986,675

D) $2,354,874

E) $2,284,837

Answer

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