Miller Mfg. is analyzing a proposed project. The company expects to sell 8,000 units, plus or minus 2 percent. The expected variable cost per unit is $11 and the expected fixed costs are $287,000. The fixed and variable cost estimates are considered accurate within a plus or minus 5 percent range. The depreciation expense is $68,000. The tax rate is 32 percent. The sales price is estimated at $64 a unit, give or take 3 percent. What is the operating cash flow under the best case scenario?
A)$144,150
B)$148,475
C)$107,146
D)$168,630
E)$174,220

Question

Quizplus · Accepted Answer

OCF_{best case} = {{[($64 F1F1F1S1F1F1F10 1.03) - ($11 F1F1F1S1F1F1F10 0.95)] F1F1F1S1F1F1F10 (8,000 F1F1F1S1F1F1F10 1.02)} - ($287,000 F1F1F1S1F1F1F10 0.95)} {1 - 0.32} + ($68,000 F1F1F1S1F1F1F10 0.32) = $144,150