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

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Finance

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 is 13% and the tax rate is 36%.

What is operating cash flow each year? Correct response: 542,6501

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Using the an annual operating cash flow of $542,650, what is the net present value of this investment?

Should the company accept or reject this project?

Accept
Reject

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