A company will sell Widgets to consumers at a price of $85 perunit. The variable cost to produce Widgets is $23 per unit. Thecompany expects to sell 15,000 Widgets to consumers each year. Thefixed costs incurred each year will be $110,000. There is aninitial investment to produce the goods of $2,900,000 which will bedepreciated straight line over the 13 year life of the investmentto a salvage value of $0. The opportunity cost of capital is 10%and the tax rate is 31%.
a) What is operating cash flow each year? answer 634953.85
b) Using the an annual operating cash flow of $634,953.85, whatis the net present value of this investment?
Should the company accept or reject this project?
I know how to do part a but i dont know how to do part b, can uprovide steps please
