Shue Music Company is considering the sale of a new sound board used in recording studios. The

Question:

Shue Music Company is considering the sale of a new sound board used in recording studios. The new board would sell for $27,300, and the company expects to sell 1,500 per year. The company currently sells 1,850 units of its existing model per year. If the new model is introduced, sales of the existing model will fall to 1,520 units per year. The old board retails for $25,100. Variable costs are 55 percent of sales for both boards, depreciation on the equipment to produce the new board will be $1.85 million per year, and fixed costs are $2.8 million per year. If the tax rate is 22 percent, what is the annual OCF for the project?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Essentials Of Corporate Finance

ISBN: 9781265414962

11th Edition

Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan

Question Posted: