1. A new project is expected to generate $1,000,000 in revenues, $250,000 in cash operating...
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1. A new project is expected to generate $1,000,000 in revenues, $250,000 in cash operating expenses, and depreciation expense of $200,000 in each year of its 10-year life. The corporation's tax rate is 21%. The project will require an increase in net working capital of $85,000 in the beginning and a decrease in net working capital of $75,000 in year ten. What is the free cash flow from the project in year one?
Answers: A. $634,500
B. $298,000
C. $380,000
D. $410,000
2. Ram Steel Co. typically achieves one of three production levels in any given year: 25 million pounds of steel, 18 million pounds of steel, or 12 million pounds of steel. In tracking some of its costs, Ram's controller discovered one cost that was $15 per pound at all production level. This is an example of a
Answers: A. fixed cost. B. variable cost. C. semivariable cost. D. semifixed cost.
3. As the volume of production increases the variable cost per unit of the product decreases. A. True B. False
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