1 A project requires an initial investment of $150 million in new equipment. The equipment is assumed to be depreciated straight-line to zero over its 10-year life. The pre-tax salvage value of the equipment at the end of the project is assumed to be 50 million. No additional net working capital is required for this project. The appropriate discount rate is 18%. What is the operating cash flow in each year at the accounting break-even quantity? A. B. C. D. E. 5 million 10 million 15 million 25 million Not able to be calculated given available information. 2 Which one of the following statements is correct concerning a corporation with taxable income of $-890,000? A. B. C. D. E. Net income minus dividends paid will equal the ending retained earnings for the year. An increase in depreciation will decrease the operating cash flow, holding all other things as constant. An increase in the tax rate will increase net income, holding all other things as constant. Net income divided by the number of shares outstanding will equal the dividends per share. None of the above. 3 Assume a project has a sales quantity of 7,400 units, 46 percent and a sales price of $59 per unit, +1 percent. The expected variable cost per unit is $13, +3 percent, and the expected fixed costs are $214,000, +2 percent. The depreciation expense is $63,000 and the tax rate is 23 percent. What is the operating cash flow under the worst- case scenario? A. B. C. D. E. $73,056.92 $87,546.92 $98,315.90 $111,818.00 $125,456.86