Minor Electric has received a special one-time order for 1,200 light fixtures (units) at $10 per unit. Minor currently produces and sells 6,000 units at $11.00 each. This level represents 75% of its capacity. Production costs for these units are $12.00 per unit, which includes $8.00 variable cost and $4.00 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $600 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. If Minor wishes to earn $1,000 on the special order, the size of the order would need to be:. A. 3,200units
B. 120units
C. 650units
D. 800units
E. 1,600units

Shrieves casting company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by sidney johnson, a recently graduated mba. the production line would be set up in unused space in the main plant. the machinery’s invoice price would be approximately $200,000, another $10,000 in shipping charges would be required, and it would cost an additional $30,000 to install the equipment. the machinery has an economic life of 4 years, and shrieves has obtained a special tax ruling that places the equipment in the macrs 3-year class. the machinery is expected to have a salvage value of $25,000 after 4 years of use. the new line would generate incremental sales of 1,250 units per year for 4 years at an incremental cost of $100 per unit in the first year, excluding depreciation. each unit can be sold for $200 in the first year. the sales price and cost are both expected to increase by 3% per year due to inflation. further, to handle the new line, the firm’s net working capital would have to increase by an amount equal to 12% of sales revenues. the firm’s tax rate is 40%, and its overall weighted average cost of capital, which is the risk-adjusted cost of capital for an average project (r), is 10%. define “incremental cash flow.” (1) should you subtract interest expense or dividends when calculating project cash flow?