Uptown Motors Is Analyzing a Project with Annual Sales of $420,000,straight-Line

question 72

Multiple Choice

Uptown Motors is analyzing a project with annual sales of $420,000,straight-line depreciation of $28,700 a year,and a net working capital requirement of $34,000.The firm has a tax rate of 34 percent and a profit margin of 6.1 percent.The firm has no long-term debt.What is the amount of the operating cash flow?

• A)$24,384.42
• B)$50,616.67
• C)$54,320.00
• D)$58,340.70
• E)$26,667.20

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Definitions:

Present Value Index

A financial calculation that allows the comparison of the present value of cash inflows to the present value of cash outflows.

Rate of Return

A measure of the profitability of an investment, expressed as a percentage of the original investment.

Desired Rate

A targeted rate of return or performance that a company or individual aims to achieve, often used in financial and operational planning.

Present Value Methods

Techniques used to estimate the current value of future cash flows, discounting them at a specified rate.