Problem:
Project EXPAND will result in an increase of 5,000 units per year at a sale price of $10 each (assume 0% inflation). The additional sales will generate additional operating expenditures of $7 per unit plus $3,000 in fixed operating costs. In addition, the firm will see an increase in depreciation expense of $12,000 per year. The firm anticipates it will remain at the current marginal rate of 40%.
Required:
Question: What is the incremental net cash flow?
- $25,000
- $12,000
- -$10,000
- $9,000
- none of the above
Note: Please show guided help with steps and answer.