Exam 11: Project Analysis and Evaluation

Magellen Industries is analyzing a new project. The data they have gathered to date is as follows: 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 variable cost under the best-case scenario?

All else the same, if you decrease fixed costs, will also operating cash flow decline.

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

What is the benefit of scenario analysis if it does not produce an "accept" or "reject" decision for a proposed project?

Management wants to offer a "Thank You" sale to its customers by offering to sell additional units of a product at the lowest price possible without affecting their profits. The price management charges For these one-time sale units should be set equal to the:

In a financial break-even calculation, the present value of the cash inflows equals the amount of the initial investment.

Which of the following is NOT correct?

What is the operating cash flow for a sensitivity analysis using total fixed costs of $26,000?