Question: BB (This information will be used for problems 27 - 33) Silvio's Sausage Factory has come up with a new line of spicy sausages. Silvio
BB (This information will be used for problems 27 - 33) Silvio's Sausage Factory has come up with a new line of spicy sausages. Silvio has already paid $75,000 for a marketing study to determine the viability of the product. It is believed that the new line of sausages will generate sales of $625,000 per year for four years. The fixed costs associated with the product will be $215,000 per year, and variable costs will amount to 22% of sales. The equipment necessary for production of the new sausages will cost $596,000 and will be a depreciated to zero using straight line depreciation over four years. At the end of the four years Silvio believes the equipment will have a salvage value of $45,000. Silvio's Sausage paid 35% in taxes last year and has a required rate of return of 13%. What is the annual after tax operating cash flow for year 1 of the project? O $272,500.00 O $625,000.00 O $229,275.00 O $149,000.00 O $80,275.00
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