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What will have to be the annual OCF for the project to have a NPV = 0 in the following situation: A client is interested
What will have to be the annual OCF for the project to have a NPV = 0 in the following situation: A client is interested in buying 320 microwaves a year from you for 5 years. To be able to produce these microwaves, you need to invest in $770 in equipment. The equipment has a taxable life of 10 years and will be depreciated using straight line. At the end of the 5 years, the equipment can be sold for $50 (market or scrap value) The variable cost of producing the microwaves is $13 per unit and you will incur in a fixed cost of $130 a year. You have estimated you will need $60 today in working capital. The appropriate discounting rate for this type of project is 12%. The corporate tax rate applicable to you in this case is 20%. For your answer, do not enter the dollar sign ($), use commas to separate thousands, and round to zero decimals (the nearest dollar). For example, if your answer is $12,068.89 then enter 12,069, if your answer is $4,000 then enter 4,000 Your Answer: What will have to be the annual OCF for the project to have a NPV = 0 in the following situation: A client is interested in buying 320 microwaves a year from you for 5 years. To be able to produce these microwaves, you need to invest in $770 in equipment. The equipment has a taxable life of 10 years and will be depreciated using straight line. At the end of the 5 years, the equipment can be sold for $50 (market or scrap value) The variable cost of producing the microwaves is $13 per unit and you will incur in a fixed cost of $130 a year. You have estimated you will need $60 today in working capital. The appropriate discounting rate for this type of project is 12%. The corporate tax rate applicable to you in this case is 20%. For your answer, do not enter the dollar sign ($), use commas to separate thousands, and round to zero decimals (the nearest dollar). For example, if your answer is $12,068.89 then enter 12,069, if your answer is $4,000 then enter 4,000 Your
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