Kurt's Kabinets Is Looking at a Project That Will Require

question 74

Multiple Choice

Kurt's Kabinets is looking at a project that will require €80,000 in non-current assets and another €20,000 in net working capital.The project is expected to produce sales of €110,000 with associated costs of €70,000.The project has a 4-year life.The company uses straight-line depreciation to a zero book value over the life of the project.The tax rate is 35%.What is the operating cash flow for this project?

• A)€7,000
• B)€13,000
• C)€27,000
• D)€33,000
• E)€40,000

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Definitions:

Total Product

The total quantity of output produced by a firm or economy, encompassing all goods and services.

Nonlabor Resources

Inputs in production that do not involve human labor, such as capital, land, and natural resources.

Marginal Product

The additional output produced as a result of adding one more unit of a specific input, holding other inputs constant.

Total Product

The total output or production achieved by a firm with a given amount of resources.