Operating cash flow. Huffman Systems has forecasted sales for its new home alarm systems to be 65,000 units per year at $42.00 per unit. The cost to produce each unit is expected to be about 41% of the sales price. The new product will have an additional $460,000 of fixed costs each year, and the manufacturing equipment will have an initial cost of $3,000,000 and will be depreciated over eight years (straight line). The company tax rate is 38%. What is the annual operating cash flow for the alarm systems if the projected sales and price per unit are constant over the next eight years? What is the annual operating cash flow for the alarm systems? (Round to the nearest dollar.)

Operating cash flow. Huffman Systems has forecasted sales for its new home alarm systems to be 65,000 units per year at $42.00 per unit. The cost to produce each unit is expected to be about 41% of the sales price. The new product will have an additional $460,000 of fixed costs each year, and the manufacturing equipment will have an initial cost of $3,000,000 and will be depreciated over eight years (straight line). The company tax rate is 38%. What is the annual operating cash flow for the alarm systems if the projected sales and price per unit are constant over the next eight years? What is the annual operating cash flow for the alarm systems? (Round to the nearest dollar.)

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 4E: Determine cash flows Natural Foods Inc. is planning to invest in new manufacturing equipment to make...

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