Project EXPAND will result in an increase of 5,000 units per year at a sale pric
ID: 2701487 • Letter: P
Question
Project EXPAND will result in an increase of 5,000 units per year at a sale price of $10 each (assume 0% inflation). The additional sales will generate additional operating expenditures of $7 per unit plus $3,000 in fixed operating costs. In addition, the firm will see an increase in depreciation expense of $12,000 per year. The firm anticipates it will remain at the current marginal rate of 40%. What is the incremental net cash flow?
$25,000
$12,000
-$10,000
$9,000
none of the above
$25,000
$12,000
-$10,000
$9,000
none of the above
Explanation / Answer
c
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