Question

A store will cost $750,000 to open. Variable costs will be 43% of sales and fixed costs are $100,000 per year. The investment costs will be depreciated straight-line over the 17 year life of the store to a salvage value of zero. The opportunity cost of capital is 12% and the tax rate is 35%.

Find the operating cash flow each year if sales revenue is $800,000 per year.

Answer #1

A project requires an initial capital spending on the fixed
asset of $790,395. The asset will be depreciated straight-line to
zero over the project's life of 6 years. The project will generate
$330,165 in annual sales, with annual operating costs of $220,110.
The tax rate is 24%. What is the annual operating cash flow for
this project?

Emperor’s Clothes Fashions can invest $6 million in a new plant
for producing invisible makeup. The plant has an expected life of 5
years, and expected sales are 7 million jars of makeup a year.
Fixed costs are $1.8 million a year, and variable costs are $2.50
per jar. The product will be priced at $3.40 per jar. The plant
will be depreciated straight-line over 5 years to a salvage value
of zero. The opportunity cost of capital is 12%,...

We are evaluating a project that costs $732,000, has a six-year
life, and has no salvage value. Assume that depreciation is
straight-line to zero over the life of the project. Sales are
projected at 55,000 units per year. Price per unit is $60, variable
cost per unit is $30, and fixed costs are $640,000 per year. The
tax rate is 35 percent, and we require a return of 12 percent on
this project. Suppose the projections given for price, quantity,...

You are evaluating a project for The Tiff-any golf club,
guaranteed to correct that nasty slice. You estimate the sales
price of The Tiff-any to be $490 per unit and sales volume to be
1,200 units in year 1; 1,125 units in year 2; and 1,000 units in
year 3. The project has a 3-year life. Variable costs amount to
$270 per unit and fixed costs are $100,000 per year. The project
requires an initial investment of $138,000 in assets,...

You are evaluating a project for The Tiff-any golf club,
guaranteed to correct that nasty slice. You estimate the sales
price of The Tiff-any to be $490 per unit and sales volume to be
1,200 units in year 1; 1,125 units in year 2; and 1,000 units in
year 3. The project has a 3-year life. Variable costs amount to
$270 per unit and fixed costs are $100,000 per year. The project
requires an initial investment of $138,000 in assets,...

Swifty Company manufactures a product with a unit variable cost
of $43 and a unit sales price of $76. Fixed manufacturing costs
were $80500 when 11500 units were produced and sold, equating to $7
per unit. The company has a one-time opportunity to sell an
additional 1300 units at $55 each in an international market which
would not affect its present sales. The company
has sufficient capacity to produce the additional units. How much
is the relevant income effect of...

??Huffman Systems has forecasted sales for its new home alarm
systems to be 65,000 units per year at $39.00 per unit. The cost to
produce each unit is expected to be about 41?% of the sales price.
The new product will have an additional 450,000 of fixed costs
each? year, and the manufacturing equipment will have an initial
cost of $3,100,000 and will be depreciated over eight years?
(straight line). The company tax rate is 35?%.
What is the annual...

Total fixed cost = $66,000
Selling price per unit = $14
Variable costs per unit = $6
Net target income (after tax) = $52,000
Tax rate = 35%.
a)Calculate break even point in units
b) calculate the sales revenue (in dollars) required to achieve
the target income
c) calculate the difference in operating income when one extra
unit is sold
d) if fixed cost increased by 20%, what is the new unit
contribution margin required to maintain the same break-even...

Ripa Company has the following data:
Sales revenue
$360,000
Variable costs
$240,000
Contribution margin
$120,000
Fixed costs
$100,000
Operating income
$ 20,000
What will the contribution margin ratio be at Ripa Company if sales
volume increases by 15%?

A project with a life of 10 has an initial fixed asset
investment of $40,320, an initial NWC investment of $3,840, and an
annual OCF of –$61,440. The fixed asset is fully depreciated over
the life of the project and has no salvage value. If the required
return is 9 percent, what is the project's equivalent annual cost,
or EAC?
$-64,664.85
$-57,858.03
$-43,683.88
$-71,471.68
$-68,068.27
A gym owner is considering opening a location on the other side
of town. The...

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