# Question

Huffman Systems has forecasted the following sales for home alarm systems to be 63,000 units per year at $38.50 per unit. The cost to produce each unit is expected to be about 42% of the sales price. The new product will have an additional $494,000 fixed costs each year, and the manufacturing equipment will have an initial cost of $2,400,000 and will be depreciated over eight years (straight-line). The company tax rate is 40%. 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?

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