Question: the answer is 30,000. could you explain how to get to that number RET inc. has decided to manufacture and sell a new line of
RET inc. has decided to manufacture and sell a new line of high-priced commercial mowers. Annual sales for the new line of mowers is estimated at $800,000 a year for each of the next 10 years. The variable costs are 70% of sales and fixed costs are $200,000 annually. marketing study that cost $1,000,000 done six months ago revealed that introducing this new line of mowers will result in lost sales of existing products of $30,000 a year. The lost sales have a variable cost of $20,000 a year. The plant and equipment required for producing the new line of stoves costs $3,000,000 (today) and will be depreciated down to zero over 10 years using straight-line depreciation. The plant and equipment is sold for $400,000 at the end of 10 years. Net working capita increases by $300,000 at the beginning of the project (year 0 ) and it is reduced back to its original level in the final year. The tax rate is 30 percent and the discounting rate for the project is 8%. What is the annual Earnings Before interests, Taxes, and Depreciation/Amortization (EBITDA)? RET inc. has decided to manufacture and sell a new line of high-priced commercial mowers. Annual sales for the new line of mowers is estimated at $800,000 a year for each of the next 10 years. The variable costs are 70% of sales and fixed costs are $200,000 annually. marketing study that cost $1,000,000 done six months ago revealed that introducing this new line of mowers will result in lost sales of existing products of $30,000 a year. The lost sales have a variable cost of $20,000 a year. The plant and equipment required for producing the new line of stoves costs $3,000,000 (today) and will be depreciated down to zero over 10 years using straight-line depreciation. The plant and equipment is sold for $400,000 at the end of 10 years. Net working capita increases by $300,000 at the beginning of the project (year 0 ) and it is reduced back to its original level in the final year. The tax rate is 30 percent and the discounting rate for the project is 8%. What is the annual Earnings Before interests, Taxes, and Depreciation/Amortization (EBITDA)
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