Burke's Corner currently sells blue jeans and T-shirts. Management is considering adding fleece tops to its inventory to provide a cooler weather option. The tops would sell for $46 each with expected sales of 4,650 tops annually. By adding the fleece tops, management feels the firm will sell an additional 320 pairs of jeans at $58 a pair and 455 fewer T-shirts at $19 each. The variable cost per unit is $29 on the jeans, $9 on the T-shirts, and $24 on the fleece tops. With the new item, the depreciation expense is $26,000 a year and the fixed costs are $79,500 annually. The tax rate is 40 percent. What is the project's operating cash flow? Multiple Choice $15,782 $26,918 $21,412 $21,242

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Burke's Corner currently sells blue jeans and T-shirts. Management is considering adding fleece tops to its
inventory to provide a cooler weather option. The tops would sell for $46 each with expected sales of 4,650
tops annually. By adding the fleece tops, management feels the firm will sell an additional 320 pairs of jeans at
$58 a pair and 455 fewer T-shirts at $19 each. The variable cost per unit is $29 on the jeans, $9 on the T-shirts,
and $24 on the fleece tops. With the new item, the depreciation expense is $26,000 a year and the fixed costs
are $79,500 annually. The tax rate is 40 percent. What is the project's operating cash flow?
Multiple Choice
$15,782
$26,918
$21,412
$21,242
Transcribed Image Text:Burke's Corner currently sells blue jeans and T-shirts. Management is considering adding fleece tops to its inventory to provide a cooler weather option. The tops would sell for $46 each with expected sales of 4,650 tops annually. By adding the fleece tops, management feels the firm will sell an additional 320 pairs of jeans at $58 a pair and 455 fewer T-shirts at $19 each. The variable cost per unit is $29 on the jeans, $9 on the T-shirts, and $24 on the fleece tops. With the new item, the depreciation expense is $26,000 a year and the fixed costs are $79,500 annually. The tax rate is 40 percent. What is the project's operating cash flow? Multiple Choice $15,782 $26,918 $21,412 $21,242
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