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NPV. Huffman Systems has forecasted sales for its new home alarm systems to be 63,000 units per year at $37.00 per unit. The cost to
NPV. Huffman Systems has forecasted sales for its new home alarm systems to be 63,000 units per year at $37.00 per unit. The cost to produce each unit is expected to be about 42% of the sales price. The new product will have an additional $480,000 of fixed costs each year, and the manufacturing equipment will have an initial cost of $2,350,000 and will be depreciated over eight years (straight line). The company tax rate is 40%. What is the annual operating cash flow for the alarm systems if the projected sales and price per unit are constant over the next eight years? Should Huffman Systems add the new home alarm system to its set of products? The manufacturing equipment will be sold off at the end of eight years for $210,000, and the cost of capital for this project is 14%. What is the annual operating cash flow of the new alarm systems? (Round to the nearest dollar.) What is the after-tax cash flow of the alarm systems at disposal? $ (Round to the nearest dollar.) What is the NPV of the new alarm syatems? $ (Round to the nearest dollar.) Should Huffman Systems add the new home alarm systems to its set of products? (Select the best response.) A. Yes, because the project will generate enough wealth to give investors an adequate yield. B. No, because the NPV is negative which means the projected annual rate of return on the project is less than the cost of capital
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