Question
(20-P, 30-min) A proposed orange juice-manufacturing plant-produces 10,000,000 kg orange juice per year. The fixed capital investment for the plant is estimated as $5,500,000. The
(20-P, 30-min) A proposed orange juice-manufacturing plant-produces 10,000,000 kg orange juice per year. The fixed capital investment for the plant is estimated as $5,500,000. The cost for raw material is $0.4/kg product; cost for utilities is $0.25/kg product; cost of operating labor is $0.35/kg product. Assume the annual depreciation is 10% of fixed capital investment. No patent and loyalties, rent, and financing are involved in the process. The company. wants to spend 2% of the annual sale revenue on research and development (R&D). All the other costs occur at an average rate for the industry. The selling price of the orange juice is estimated to be $3.25/kg. The income tax rate is 30%. Estimate-the-amount-of-annual-cash-flow-($/year)-from-the- plant-(25-P)T
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