DEI will incur $8,900,000 in annual fixed costs. The plan is to manufacture and sell 26,000 machines per year at $8,600 each; the variable cost of production are $7,600 per machine. What is the annual operating cash flow for DEI? The plant and new equipment will cost $45 million to build. DEIs tax rate is 30 percent.

The manufacturing plant has an eight-year tax life, and DEI uses straight-line depreciation. At the end of the project (i.e., the end of Year 5), the plant can be scrapped for $1.7 million.