What is the total incremental cash flow for project

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Reference no: EM132050631

1. Project Z will result in unit sales of 2,250, at a price of $650 each. The variable cost (VC) of each unit is $325. The cost accountant will allocate overhead on the existing plant to Project Z at a rate of $21 per unit. A special piece of equipment must be leased for $75,000 per year for purposes related solely to Project Z. Project Z will reduce sales of the same company’s Project X by 900 units (selling price of $950 with variable cost of $510 and overhead allocation of $32 per unit). What is the total incremental cash flow for Project Z?

A) $184,200

B) $260,250

C) $259,200

D) $306,450

E) $335,250

2. A new piece of specialty equipment costs $2,000,000 and will be depreciated to an expected salvage value of $250,000 on a straight-line basis over its 5-year life. Assuming a tax rate of 40%, what is its after-tax salvage value if the equipment is actually sold after 3 years for $1,250,000?

A) $180,000

B) $500,000

C) $500,000

D) $1,130,000

E) $1,250,000

Reference no: EM132050631

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