Question: part A and B are given to help solve part C A company will sell Gizmos to consumers at a price of $81 per unit.


A company will sell Gizmos to consumers at a price of $81 per unit. The variable cost to produce Gizmos is $35 per unit. The company expects to sell 12,000 Gizmos to consumers each year. The fixed costs incurred each year will be $160,000. There is an initial investment to produce the goods of $3,700,000 which will be depreciated straight line over the 13 year life of the investment to a salvage value of $0. The opportunity cost of capital is 10% and the tax rate is 36%. What is operating cash flow each year? 353341.5 Correct response: 353,341.5411 Click "Verity to proceed to the next part of the question. Using the an annual operating cash flow of $353,341.54, what is the net present value of this investment? -1190089. Correct response: -1,190,089.18010 Should the company accept or reject this project? Accept Reject Correct response: Reject Click "Verify to proceed to the next part of the question. What is the net present value of the project if inventories must be increased at the start of the project (year O) by $700,000 and will be recovered at the end year 13), given that the NPV of the project ignoring changes in net working capital is $-1,190,089.187 Number Click "Verify to proceed. Section Attempt 1 of 1 Verify
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