Stellar Plastics Is Analyzing a Proposed Project with Annual Depreciation

Stellar Plastics is analyzing a proposed project with annual depreciation of $28,750 and a tax rate of 23 percent. The company expects to sell 16,500 units, ±3 percent. The expected variable cost per unit is $1.87, ±1 percent, and the expected fixed costs are $24,900, ±1 percent. The sales price is estimated at $7.99 a unit, ±2 percent. What is the operating cash flow for a sensitivity analysis using total fixed costs of $26,000?

A) $54,208
B) $64,347
C) $63,591
D) $62,408
E) $60,540

Correct Answer:

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