ZuoTi.Pro
Question

A company will sell Thingamabobs to consumers at a price of $106 per unit. The variable...

A company will sell Thingamabobs to consumers at a price of $106 per unit. The variable cost to produce Thingamabobs is $42 per unit. The company expects to sell 13,000 Thingamabobs to consumers each year. The fixed costs incurred each year will be $180,000. There is an initial investment to produce the goods of $3,200,000 which will be depreciated straight line over the 15 year life of the investment to a salvage value of $0. The opportunity cost of capital is 8% and the tax rate is 37%.

a. Using the an annual operating cash flow of $489,693.33, what is the net present value of this investment?

b. should the company reject or accept the project?

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Year Cashflows 0 $ (3,200,000) 1 $ 489,693.33 2 $ 489,693.33 3 $ 489,693.33 4 $ 489,693.33 5 $ 489,693.33 6 $ 489,693.33 7 $

*Please rate thumbs up

0 0
Add a comment
Know the answer?
Add Answer to:
A company will sell Thingamabobs to consumers at a price of $106 per unit. The variable...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • A company will sell Thingamabobs to consumers at a price of $106 per unit. The variable...

    A company will sell Thingamabobs to consumers at a price of $106 per unit. The variable cost to produce Thingamabobs is $42 per unit. The company expects to sell 13,000 Thingamabobs to consumers each year. The fixed costs incurred each year will be $180,000. There is an initial investment to produce the goods of $3,200,000 which will be depreciated straight line over the 15 year life of the investment to a salvage value of $0. The opportunity cost of capital...

  • A company will sell Widgets to consumers at a price of $102 per unit. The variable...

    A company will sell Widgets to consumers at a price of $102 per unit. The variable cost to produce Widgets is $50 per unit. The company expects to sell 17,000 Widgets to consumers each year. The fixed costs incurred each year will be $190,000. There is an initial investment to produce the goods of $2,500,000 which will be depreciated straight line over the 13 year life of the investment to a salvage value of $0. The opportunity cost of capital...

  • A company will sell Gizmos to consumers at a price of $102 per unit. The variable...

    A company will sell Gizmos to consumers at a price of $102 per unit. The variable cost to produce Gizmos is $44 per unit. The company expects to sell 15,000 Gizmos to consumers each year. The fixed costs incurred each year will be $110,000. There is an initial investment to produce the goods of $2,500,000 which will be depreciated straight line over the 16 year life of the investment to a salvage value of $0. The opportunity cost of capital...

  • A company sells Gizmos to consumers at a price of $84 per unit. The cost to...

    A company sells Gizmos to consumers at a price of $84 per unit. The cost to produce Gizmos is $22 per unit. The company will sell 10,000 Gizmos to consumers each year. The fixed costs incurred each year will be $200,000. There is an initial investment to produce the goods of $2,500,000 which will be depreciated straight line over the 6 year life of the investment to a salvage value of $0. The opportunity cost of capital is 12% and...

  • A company sells Widgets to consumers at a price of $113 per unit. The costs to...

    A company sells Widgets to consumers at a price of $113 per unit. The costs to produce Widgets is $23 per unit. The company will sell 10,000 Widgets to consumers each year. The fixed costs incurred each year will be $160,000. There is an initial investment to produce the goods of $3,100,000 which will be depreciated straight line over 14 year life of the investment to a salvage value of $0. The opportunity cost of capital is 10% and the...

  • ABC Company has variable operating cost of $15 per unit and sell price of 22 per...

    ABC Company has variable operating cost of $15 per unit and sell price of 22 per unit if company’s operating break-even point is 3000 unit: What is the fixed operating cost? If company produce 500 units what is company’s EBIT? Calculate the degree of operating leverage when company make 4000 units.

  • We make and sell a single product that sell for $42 per unit. The variable cost...

    We make and sell a single product that sell for $42 per unit. The variable cost to manufacture is unit is $10; the variable cost to sell each unit is $5. Last year, we sold 5,000 units and made a profit of $60,000. How many units must we sell to make a profit of $100,000 this year? A. 100,000 B. 75,000 C. 6,000 OD. None of the above.

  • 2. ABC Company has variable operating cost of $15 per unit and sell price of $25...

    2. ABC Company has variable operating cost of $15 per unit and sell price of $25 per unit if company's operating break-even point is 3000 unit: a) What is the fixed operating cost? b) If company produce 5000 units what is company's EBIT? c) Calculate the degree of operating leverage when company make 4000 units.

  • 1. Lens Company has variable operating cost of $16 per unit and sell price of $25...

    1. Lens Company has variable operating cost of $16 per unit and sell price of $25 per unit if company's operating break-even point is 3500 unit: a) What is the fixed operating cost? b) If company produce 5000 units what is company's EBIT? c) Calculate the degree of operating leverage when company make 6000 units.

  • 1. Lens Company has variable operating cost of $16 per unit and sell price of $25...

    1. Lens Company has variable operating cost of $16 per unit and sell price of $25 per unit if company's operating break-even point is 3500 unit: a) What is the fixed operating cost? b) If company produce 5000 units what is company's EBIT? c) Calculate the degree of operating leverage when company make 6000 units.

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT