The Can-Do Co

question 3

Multiple Choice

The Can-Do Co. is analyzing a proposed project. The company expects to sell 12,000 units, give or take 4%. The expected variable cost per unit is $7 and the expected fixed cost is $36,000. The fixed and variable cost estimates are considered accurate within a plus or minus 6% range. The depreciation expense is $30,000. The tax rate is 34%. The sale price is estimated at $14 a unit, give or take 5%. The company bases its sensitivity analysis on the expected case scenario.
-What is the earnings before interest and taxes under the pessimistic case scenario?

• A)-$566.02
• B)-$422.40
• C)-$278.78
• D)$3,554.50
• E)$5,385.60

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