NPV. Grady Precision Measurement Tools has forecasted the following sales and costs for a new GPS...

Transcribed Image Text:

NPV. Grady Precision Measurement Tools has forecasted the following sales and costs for a new GPS system: annual sales of 44,000 units at $17 a unit, production costs at 39% of sales price, annual fixed costs for production at $200,000. The company tax rate is 35%. What is the annual operating cash flow of the new GPS system? Should Grady Precision Measurement Tools add the GPS system to its set of products? The initial investment is $1,420,000 for manufacturing equipment, which will be depreciated over six years (straight line) and will be sold at the end of five years for $380,000. The cost of capital is 12%. NPV. Grady Precision Measurement Tools has forecasted the following sales and costs for a new GPS system: annual sales of 44,000 units at $17 a unit, production costs at 39% of sales price, annual fixed costs for production at $200,000. The company tax rate is 35%. What is the annual operating cash flow of the new GPS system? Should Grady Precision Measurement Tools add the GPS system to its set of products? The initial investment is $1,420,000 for manufacturing equipment, which will be depreciated over six years (straight line) and will be sold at the end of five years for $380,000. The cost of capital is 12%.