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Q1 Q2 Please Indicate answers and solution. A company sells Tidbits to consumers at a price of $102 per unit. The costs to produce Tidbits
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A company sells Tidbits to consumers at a price of $102 per unit. The costs to produce Tidbits is $21 per unit. The company will sell 13,000 Tidbits to consumers each year. The fixed costs incurred each year will be $250,000. There is an initial investment to produce the goods of $2,900,000 which will be depreciated straight line over 13 year life of the investment to a salvage value of $0. The opportunity cost of capital is 13% and the tax rate is 35%. What is operating cash flow each year? 600026.92 Correct response: 600,026.92+10 Click "Verify" to proceed to the next part of the question. Using an operating cash flow of 600,026.92 each year, what is the NPV of this project? 773251.73 Correct response: 773,251.71+100 Click "Verify" to proceed to the next part of the question. Given a net present value of $773,251.71, should the company accept or reject this project? Reject Accept Correct response: Accept Click "Verify" to proceed to the next part of the question. Find the net present value break-even level of units sold. Round your answer to the nearest whole unit Enter your response below. Number There is a 17% chance that the amount of oil in a prospective field is 5 million barrels and a 83% chance of 13 million barrels. If the actual amount of oil is 5 million barrels, the present value of the cash flows from dring will be $2 million. If the amount is 13 million barrels, the present value will be $7.5 million. The cost to drill the well is $4.5 million. Suppose, a test that costs $150,000 can verify the amount of oil under the ground, is it worth paying for the test? Please enter the full number as your answer. (I.e., 10,000,000 and NOT 10 million) What is the net present value of not testing? Number What is the net present value of testing? Number Should the company perform the test to verify the amount of oil under the ground? Test No TestStep by Step Solution
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