Part 1: Miller Mfg. is analyzing a proposed project. The company expects to sell

Question

Part 1: Miller Mfg. is analyzing a proposed project. The company expects to sell 11,000 units, give or take 4 percent. The expected variable cost per unit is $7.00 and the expected fixed cost is $35,000. The fixed and variable cost estimates are considered accurate within a plus or minus 5 percent range. The depreciation expense is $30,000. The tax rate is 34 percent. The sale price is estimated at $12.00 a unit, give or take 5 percent. What is the earnings before interest and taxes under the base case scenario? A)$25,000 B)$4,818 C) $20,000 D)$-5,000 E) $-10,000 Part 2: Miller Mfg. is analyzing a proposed project. The company expects to sell 11,000 units, plus or minus 3 percent. The expected variable cost per unit is $8.00 and the expected fixed cost is $36,000. The fixed and variable cost estimates are considered accurate within a plus or minus 6 percent range. The depreciation expense is $32,000. The tax rate is 34 percent. The sale price is estimated at $14.00 a unit, give or take 3 percent. What is the net income under the worst case scenario? A) $-10,390.38 B) $-21,728.49 C) $-15,743.00 D) $-22,361.36 E) $-21,095.62

Explanation / Answer

please do rate the answer :):) Answer is option C C) $-15,743.00

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