Question
A company sells Tidbits to consumers at a price of $103 per unit. The costs to produce Tidbits is $31 per unit. The company will
A company sells Tidbits to consumers at a price of $103 per unit. The costs to produce Tidbits is $31 per unit. The company will sell 19,000 Tidbits to consumers each year. The fixed costs incurred each year will be $150,000. There is an initial investment to produce the goods of $2,100,000 which will be depreciated straight line over 11 year life of the investment to a salvage value of $0. The opportunity cost of capital is 11% and the tax rate is 31%. What is operating cash flow each year? 899,601.82
Using an operating cash flow of 899,601.82 each year, what is the NPV of this project? 3,483,392.48
Given a net present value of $3,483,392.48, should the company accept or reject this project? Accept
**Find the net present value break-even level of units sold. Round your answer to the nearest whole unit.
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