Question: A store will cost $1,000,000 to open. Variable costs will be 42% of sales and fixed costs are $230,000 per year. The investment costs will

A store will cost $1,000,000 to open. Variable costs will be 42% of sales and fixed costs are $230,000 per year. The investment costs will be depreciated straight-line over the 12 year life of the store to a salvage value of zero. The opportunity cost of capital is 11% and the tax rate is 25%.

Find the operating cash flow each year if sales revenue is $700,000 per year.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Can someone please help me with practice questions. I keep messing it up somewhere along the way. You estimate that your say farm will generate 2.7 million of profits on sales of 4.4 million under...

Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $2,170,000 and will last for 4 years. Variable costs are 34 percent of sales, and fixed...

1) Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,072,000 and will last for six years. Variable costs are 35 percent of sales, and...

Alpha Coal is an American coal mining and processing company. The company mines, processes, and markets bituminous and sub-bituminous coal with low sulfur content in the United States. Arch Coal is...

An Armenian dried fruit producing company has developed a new type of dried apricot that can be sold for $6 per box (real) and that is expected to have continuing popularity for many years. For this...

An Ararat Valley fruit producing company has developed a new type of dried peach that can be sold for $7 per box (real). For this particular product the company has proposed that investment should be...

Axiom Berhad projects unit sales for a new fitness equipment as follows: Year Unit Sales 1 4,200 2 3,500 3 4,000 The estimated selling price of the fitness equipment is $1,200 per unit. The variable...

Qualitative Option Suggested analytical models (pick anyone you feel comfortable to work with): SWOT: Strengths/Weaknesses/Opportunities/Threats 4-P: Price, Promotion, Product, and Place 5-C: Capital...

You are considering a new product launch. The project will cost $1,192,500, have a ve-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 230 units per...

Describe some areas in which packaged information may be applied.

Suppose Jorge Otero has set up an annuity due with a certain credit union. At the beginning of each month, $120 is electronically debited from his checking account and placed into a savings account...

54. LO.6 Martinho is a citizen of Brazil and lives there year-round. He has invested in a plot of Illinois farmland with a tax basis to him of $1 million. Martinho has no other business or investment...

Use the dropdown menus in the following diagram to specify the behaviors that match the reinforcement theory techniques Brent could use on Jacinta.

2. What external forces influence the future of community colleges and universities? List these and discuss the implications for the demand for faculty.

OUTCOME 2 Understand how an organizations external environment influences its strategic planning.

OUTCOME 3 Understand why it is important for an organization to do an internal resource analysis.