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What is the operating cash flow or a sensitivity analysis

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Question - A project requires an initial investment of $69,000 for equipment that will be depreciated using the straight-line method to zero over the project's 4-year life. The equipment can be sold for $15,000 at the end of the project. The project requires $8,700 in net working capital. The company expects to sell 31,000 units, ±5 percent. The expected variable cost per unit is $12, and the expected fixed costs are $46,000. The fixed and variable cost estimates are considered accurate within a range of ±2 percent. The sales price is estimated at $19 a unit, ±2 percent. The discount rate is 14 percent, and the tax rate is 34 percent. What is the operating cash flow (OCF) for a sensitivity analysis using total fixed costs of $45,000?

A. $116,520

B. $124,520

C. $119,385

D. $122,000

E. $132,033

Reference no: EM133123698

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