Computing ocf for project

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Reference no: EM1339949

Q1) A project has an accounting break-even point of 2,000 units. The fixed costs are$4,200 and the depreciation expense is $400. The projected variable cost per unit is $23.10. What is the projected sales price?

Q2) Phone Home, Inc., is considering a new three-year expansion project that requires an intial fixed asset investment of $4.2 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $3,100,000 in annual sales, with costs of $990,000. If the tax rate is 35%, what is the OCF for this project?

Reference no: EM1339949

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