A Project Has Projected Sales of 25,600 Units with a Selling

Multiple Choice

A project has projected sales of 25,600 units with a selling price of $4.95 each. Annual fixed costs are $31,000 with variable costs of $2.18 per unit. The project has a three-year life and requires an
Initial investment of $62,900 for equipment. The equipment will be depreciated straight-line to zero
Over three years. The sales price has a plus-minus range of 10% while the cost estimates are
Expected to vary within a 5% range. The quantity has a plus-minus range of 8%. The tax rate is 34%.
Under the best-case scenario, what is the operating cash flow?

A) $22,268
B) $28,292
C) $42,867
D) $43,235
E) $49,259