Question
ZZz company is considering an investment (at time/year = 0) in a machine that produces headphones. The cost of the machine is 93622 dollars with
ZZz company is considering an investment (at time/year = 0) in a machine that produces headphones. The cost of the machine is 93622 dollars with zero expected salvage value. Annual production in units during the 3-year life of the machine is expected to be (starting at time = 1) 8848, 11132, and 9355. The headphones sale price per unit is 13 dollars in year one and it is expected to increase by 8% per year thereafter. Production costs per unit will be 6 dollars in year one, and then increase by 5% per year. Depreciation on the machine is 10118 dollars per year, and the tax rate is 40%. Calculate the net cash flow at time/year = 2 (not present value). Assume all flows are at the end of each year. (note: round your answer to the nearest cent, and do not include spaces, currency signs, plus or minus signs, or commas)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started