Precise Machinery Is Analyzing a Proposed Project

Multiple Choice

Precise Machinery is analyzing a proposed project. The company expects to sell 2,100 units, give or take 5 percent. The expected variable cost per unit is $260 and the expected fixed costs are $589,000. Cost estimates are considered accurate within a plus or minus 4 percent range. The depreciation expense is $129,000. The sales price is estimated at $750 per unit, give or take 2 percent. The tax rate is 35 percent. The company is conducting a sensitivity analysis with fixed costs of $590,000. What is the OCF given this analysis?

A) $337,975
B) $285,350
C) $330,500
D) $354,874
E) $414,350