Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need help with this question 14. Pendant Publishing is considering a new product line that has expected sales of $1, 100,000 per year for

I need help with this question

image text in transcribed
14. Pendant Publishing is considering a new product line that has expected sales of $1, 100,000 per year for each of the next 5 years. New equipment that is required to produce the new product will cost $1,200,000. The equipment has a useful life of 5 years and a $300,000 salvage value and will be sold at the end of year 5 for its' salvage value. Total variable costs of the product line are $450,000 per year, total fixed costs (not including depreciation) will be an additional $180,000 per year and the initial working capital investment, to buy inventory, will be $15,000. The discount rate (interest rate) for the project is 10% and the company's tax rate is 35%. What is the operating cash flow of year 1 for the company? A. $305,500 B. $368,500 C. $470,000 D. ($846,500)

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

Accounting Information Systems

Authors: James Hall

9th Edition

1305465113, 9781305465114

More Books

Students also viewed these Accounting questions

Question

13. Give four examples of psychological Maginot lines.

Answered: 1 week ago