Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

( Estimated time allowance: 1 9 minutes ) Funzy corp. has decided to sell a new line of TVs . The firm has also spent

(Estimated time allowance: 19 minutes) Funzy corp. has decided to sell a new line of TVs. The firm has also spent $2 million in research and development for the new TVs. It is estimated that the new TVs will sell for $700 per unit and have a variable cost of $400 per unit. The firm has spent $450,000 in market research for these new TVs. It is concluded in this study that the firm can easily sell 60,000 TVs in each of the following ten years. As part of the research, it was found that the firm is very likely to lose sales of 10,000 units of its existing high-priced TVs. These TVs currently sell for $1100 each and have variable costs of $520. On the positive side, the study also revealed that the firm will increase sales of its cheap TVs by 15,000 units. The cheap TVs sell for $230 and have variable costs of $100 per set. The fixed costs each year will be $8 million. Annual depreciation is $1 million and there are no interests expenses. The corporate tax rate is 30%. What is the annual operating cash flow (OCF)? Enter your answer en millions, e.g. if you obtain $2,300,000 then enter 2.30; if your answer is $3,000,000 then enter 3.00

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Entrepreneurial Finance

Authors: Philip J. Adelman, Alan M. Marks

4th Edition

0132434792, 9780132434799

More Books

Students also viewed these Finance questions

Question

Calculate a utility estimate for a target organization

Answered: 1 week ago