You Are Analyzing a Project and Have Developed the Following

question 103

Multiple Choice

You are analyzing a project and have developed the following estimates.The depreciation is $47,900 a year and the tax rate is 35 percent.What is the worst-case operating cash flow? $$\begin{array} { | l | r | r | r | } \hline & \text { Base-Case } & \text { Lower Bound } & \text { Upper Bound } \\\hline \text { Unit sales } & 11,300 & 9,800 & 12,800 \\\hline \text { Sales price per unit } & \$ 39 & \$ 34 & \$ 44 \\\hline \text { Variable cost per unit } & \$ 25 & \$ 24 & \$ 26 \\\hline \text { Fixed costs } & \$ 9,700 & \$ 9,200 & \$ 10,200 \\\hline\end{array}$$

• A)-$2,545
• B)$11,145
• C)$88,855
• D)$27,556
• E)$61,095

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Definitions:

Beginning and End

Conceptual points in time that represent the start and conclusion of an event, process, or entity.

Recency

The principle that the most recently presented items or experiences will most likely be remembered best.

Automatic Processing

A type of information processing that occurs without the need for conscious attention, enabling tasks to be performed without deliberation.

Memory Consolidation

The process by which the brain converts short-term memories into long-term memories, making them stable over time.