6:04 IMG_0741.jpg X Given the soaring price of gasoline, Ford is considering introducing a new production line of gas-electric hybrid sedans. The expected annual unit sales of the hybrid cars is 25,000; the price is $21.000 per car. Variable costs of production are $9,000 per car. The fixed overhead including salary of top executives is $80 million per year. However, the introduction of the hybrid sedan will decrease Ford's sales of regular sedans by 12,000 cars per year; the regular sedans have a unit price of $20,000, a unit variable cost of $12.000, and fixed costs of $250,000 per year. Depreciation costs of the production plant are $45,000 per year. The marginal tax rate is 40 percent. What is the incremental annual cash flow from operations?
6:04 IMG_0741.jpg X Given the soaring price of gasoline, Ford is considering introducing a new production line of gas-electric hybrid sedans. The expected annual unit sales of the hybrid cars is 25,000; the price is $21.000 per car. Variable costs of production are $9,000 per car. The fixed overhead including salary of top executives is $80 million per year. However, the introduction of the hybrid sedan will decrease Ford's sales of regular sedans by 12,000 cars per year; the regular sedans have a unit price of $20,000, a unit variable cost of $12.000, and fixed costs of $250,000 per year. Depreciation costs of the production plant are $45,000 per year. The marginal tax rate is 40 percent. What is the incremental annual cash flow from operations?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:6:04
IMG_0741.jpg
X
Given the soaring price of gasoline, Ford is considering introducing a new production line of gas-electric hybrid sedans. The expected annual unit sales of the hybrid cars is 25,000; the price
is $21.000 per car. Variable costs of production are $9,000 per car. The fixed overhead including salary of top executives is $80 million per year. However, the introduction of the hybrid
sedan will decrease Ford's sales of regular sedans by 12,000 cars per year; the regular sedans have a unit price of $20,000, a unit variable cost of $12.000, and fixed costs of $250,000 per
year. Depreciation costs of the production plant are $45,000 per year. The marginal tax rate is 40 percent. What is the incremental annual cash flow from operations?
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