Question
Shue Music Company is considering the sale of a new sound board used in recording studios. The new board would sell for $27,300, and the
Shue Music Company is considering the sale of a new sound board used in recording studios. The new board would sell for $27,300, and the company expects to sell 1,500 per year. The company currently sells 1,850 of the current model per year. If the new model is introduced, sales of the existing model will fall to 1,520 units per year. The old board retails for $25,100. Variable Costs are 55 % of sales for both boards, depreciation on the equipment to produce the new board will be $1.85 million per year, and fixed costs are $2.8 million per year. If the tax rate is 22%, what is the annual OCF for the project?
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