Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A company will sell Gizmos to consumers at a price of $111 per unit. The variable cost to produce Gizmos is $43 per unit. The
A company will sell Gizmos to consumers at a price of $111 per unit. The variable cost to produce Gizmos is $43 per unit. The company expects to sell 19,000 Gizmos to consumers each year. The fixed costs incurred each year will be $170,000. There is an initial investment to produce the goods of $3,900,000 which will be depreciated straight line over the 8 year life of the investment to a salvage value of $0. The opportunity cost of capital is 6% and the tax rate is 30% What is operating cash flow each year? 931650 Correct response: 931,6501 Click "Verify" to proceed to the next part of the question. > Using the an annual operating cash flow of $931,650, what is the net present value of this investment? 1885354 Correct response: 1,885,354.4+10 Should the company accept or reject this project? Reject Accept Correct response: Accept 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 0) by $1,000,000 and will be recovered at the end (year 8), given that the NPV of the project ignoring changes in net working capital is $1,885,354.4? Number Click "Verify" to proceed
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started