Precise Machinery Is Analyzing a Proposed Project

question 68

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 $775 per unit,give or take 2 percent.The tax rate is 34 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)$368,250
• D)$374,874
• E)$414,350

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Definitions:

Surface Waves

Seismic waves that travel along the earth's surface, causing the ground to shake in an elliptical motion, often responsible for the damage during earthquakes.

Ground Shaking

Vibrations of the earth's surface typically caused by seismic waves generated during earthquakes.

Tsunami

A large sea wave caused by underwater earthquakes or landslides.

Rigid Concrete

Concrete that, once cured, becomes very hard and lacks flexibility, used in construction for its strong structural properties.