A company will sell Gizmos to consumers at a price of $112 per unit. The variable cost to produce Gizmos is $37 per unit. The company expects to sell 19,000 Gizmos to consumers each year. The fixed costs incurred each year will be $120,000. There is an initial investment to produce the goods of $2,600,000 which will be depreciated straight line over the 12 year life of the investment to a salvage value of $0. The opportunity cost of capital is 6% and the tax rate is 36%.
What is operating cash flow each year?
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