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problem: The Can-Do Co. is analyzing a proposed project. The company expects to trade 12,000 units, give or take 4 percent. The expected variable cost per unit is dollar 7 and the expected fixed cost is dollar 36,000. The fixed and variable cost estimates are considered accurate within a plus or minus 6 percent range. The depreciation expense is dollar 30,000. The tax rate is 34 percent. The sale price is estimated at dollar 14 a unit, give or take 5 percent. The company bases its sensitivity analysis on the expected case scenario.

[A] find out the earnings before interest and taxes (EBIT) under the expected case scenario?

[B] find out the earnings before interest and taxes under the optimistic case scenario?

[C] What is the operating cash flow for a sensitivity analysis using total fixed costs of dollar 32,000?

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  • Category:- Basic Finance
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