Operating cash flow. Huffman Systems has forecasted sales for its new home alarm systems to be 65,000 units per year at $40.00 per unit. The cost to produce each unit is expected to be about 40% of the sales price. The new product will have an additional $480,000 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 38%. What is the annual operating cash flow for the alarm systems if the projected sales and price per unit are constant over the next eight years? What is the annual operating cash flow for the alarm systems? (Round to the nearest dollar.)
Operating cash flow. Huffman Systems has forecasted sales for its new home alarm systems to be 65,000 units per year at $40.00 per unit. The cost to produce each unit is expected to be about 40% of the sales price. The new product will have an additional $480,000 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 38%. What is the annual operating cash flow for the alarm systems if the projected sales and price per unit are constant over the next eight years? What is the annual operating cash flow for the alarm systems? (Round to the nearest dollar.)
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 5P
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Question
Operating cash flow. Huffman Systems has forecasted sales for its new home alarm systems to be
depreciated over eight years (straight line). The company tax rate is
65,000
units per year at
$40.00
per unit. The cost to produce each unit is expected to be about
40%
of the sales price. The new product will have an additional
$480,000
of fixed costs each year, and the manufacturing equipment will have an initial cost of
$3,100,000
and will be 38%.
What is the annual operating cash flow for the alarm systems if the projected sales and price per unit are constant over the next eight years?What is the annual operating cash flow for the alarm systems?
(Round to the nearest dollar.)
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