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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