Question

A store will cost $750,000 to open. Variable costs will be 43% of sales and fixed...

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.

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