A company will sell Gizmos to consumers at a price of $112 per unit. The variable cost to produce Gizmos is $24 per unit. The company expects to sell 12,000 Gizmos to consumers each year. The fixed costs incurred each year will be $170,000. There is an initial investment to produce the goods of $2,900,000 which will be depreciated straight

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A company will sell Gizmos to consumers at a price of $112 per unit. The variable cost to produce Gizmos is $24 per unit. The company expects to sell 12,000 Gizmos to consumers each year. The fixed costs incurred each year will be $170,000. There is an initial investment to produce the goods of $2,900,000 which will be depreciated straight line over the 19 year life of the investment to a salvage value of $0. The opportunity cost of capital is 11% and the tax rate is40%.

What is operating cash flow each year?

Using the an annual operating cash flow of $542,650, what is the net present value of this investment?

Should the company accept or reject this project?

Find the net present value break-even level of units sold. Round your answer to the nearest whole unit.

Related Book For  answer-question

Managerial Accounting Tools for business decision making

6th Edition

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso

ISBN: 978-1118096895