The Can-Do Co. is analyzing a proposed project. The company expects to sell 12,0
ID: 1171495 • Letter: T
Question
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 expected case scenario? 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 expected case scenario? 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 expected case scenario?
Explanation / Answer
Earnings before interest and tax = Sales - variable costs - fixed costs - depreciation
Earnings before interest and tax = [( 12,000 * 14) - ( 12,000 * 7) - 36,000 - 30,000]
Earnings before interest and tax = [ 168,000 - 84,000 - 36,000 - 30,000]
Earnings before interest and tax = 18,000