Question
Operating cash flow.Huffman Systems has forecasted sales for its new home alarm systems to be65,000 units per year at $41.00 per unit. The cost to
Operating cash flow.Huffman Systems has forecasted sales for its new home alarm systems to be65,000 units per year at $41.00 per unit. The cost to produce each unit is expected to be about 39% of the sales price. The new product will have an additional $460,000 of fixed costs each year, and the manufacturing equipment will have an initial cost of $2,800,000 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?
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