Green Gardens Is Analyzing a Proposed 5-Year Project That Requires

question 1

Multiple Choice

Green Gardens is analyzing a proposed 5-year project that requires an investment of $77,000 in fixed assets and $17,400 in net working capital.The company uses straight-line depreciation over a project's life.Sales are estimated at 24,000 units ±3 percent.The expected variable cost per unit is $17,and the expected fixed costs are $39,000.The fixed and variable cost estimates are considered accurate within a range of ±2 percent.The sales price is estimated at $36 a unit,±1 percent.The discount rate is 16 percent,and the tax rate is 35 percent.What is the net income under the pessimistic case scenario?

• A)$241,048.60
• B)$232,009.48
• C)$244,517.20
• D)$220,001.32
• E)$248,519.70

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