Question
1- Bad Company has a new 4-year project that will have annual sales of 9,700 units. The price per unit is $21.20 and the variable
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Bad Company has a new 4-year project that will have annual sales of 9,700 units. The price per unit is $21.20 and the variable cost per unit is $8.95. The project will require fixed assets of $107,000, which will be depreciated on a 3-year MACRS schedule. The annual depreciation percentages are 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. Fixed costs are $47,000 per year and the tax rate is 35 percent. What is the operating cash flow for Year 3?
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You plan to save $7,000 per year for the next 8 years. After the last deposit, you will keep the money in the account for 3 more years. The account will earn an interest rate of 7.3 percent. How much will there be in the account 11 years from today?
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