Question
Tim's Toys currently sells electric scooters and robotic dinosaurs. Management is considering adding marble runs to its inventory to provide more variety. The marble runs
Tim's Toys currently sells electric scooters and robotic dinosaurs. Management is considering adding marble runs to its inventory to provide more variety. The marble runs would sell for $52 each with expected sales of 4,350 runs each year. By adding the marble runs, management feels the firm will sell an additional 290 scooters at $64 each and 425 fewer dinosaurs at $25 each. The variable cost per unit is $35 on the scooters, $15 on the dinosaurs, and $30 on the marble runs. With the new item, the depreciation expense is $32,000 a year and the fixed costs are $76,500 annually. The tax rate is 40 percent. What is the project's operating cash flow?
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