Interest and taxes under the expected case scenario

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Reference no: EM1339960

Q1) Please help me understand by providing a manual solution not Excel:

Freddie is assessing a proposed project. He expects to sell 12,000 units, give or take 4% with an expected variable cost per unit at $7 and the expected fixed cost at $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.

a. What is the earnings before interest and taxes under the expected case scenario?
b. What is 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 $32,000?

Reference no: EM1339960

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