Computation of earnings before interest and taxes

Reference no: EM1314210

Computation of earnings before interest and taxes based on sensitivity analysis.

The Can-Do Co. is analyzing a proposed project. The company expects to sell 12,000 units, give or take 4%. The expected variable cost per unit is $7 and the expected fixed cost is $36,000. The fixed and variable cost estimates are considered accurate within a plus or minus 6% range. The depreciation expense is $30,000. The tax rate is 34%. The sale price is estimated at $14 a unit, give or take 5%. The company bases its sensitivity analysis on the expected case scenario.
What is the earnings before interest and taxes under the optimistic case scenario?

A. $22,694.40
B. $24,854.40
C. $37,497.60
D. $52,694.40
E. $67,947.60

Reference no: EM1314210

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