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A company will sell Widgets to consumers at a price of $118 per unit. The variable cost to produce Widgets is $34 per unit. The
A company will sell Widgets to consumers at a price of $118 per unit. The variable cost to produce Widgets is $34 per unit. The company expects to sell 12,000 Widgets to consumers each year. The fixed costs incurred each year will be $240,000. There is an initial investment to produce the goods of $2,300,000 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 5% and the tax rate is 26%.
What is operating cash flow each year?
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