A company sells Tidbits to consumers at a price of $120 per unit. The costs to produce Tidbits is $47 per unit. The company will sell 14,000 Tidbits to consumers each year. The fixed costs incurred each year will be $210,000. There is an initial investment to produce the goods of $3,300,000 which will be depreciated straight line over 9 year life of the investment to a salvage value of $0. The opportunity cost of capital is 9% and the tax rate is 36%. What is operating cash flow each year?
A company sells Tidbits to consumers at a price of $120 per unit. The costs to produce Tidbits is $47 per unit. The company will sell 14,000 Tidbits to consumers each year. The fixed costs incurred each year will be $210,000. There is an initial investment to produce the goods of $3,300,000 which will be depreciated straight line over 9 year life of the investment to a salvage value of $0. The opportunity cost of capital is 9% and the tax rate is 36%. What is operating cash flow each year?
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 5P
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