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A company sells Tidbits to consumers at a price of $120 per unit. The costs to produce Tidbits is $47 per unit. The company will sell 14,000 Tidbits to consumers each year. The fixed costs incurred each year will be $210,000. There is an initial investment to produce the goods of $3,300,000 which will be depreciated straight line over 9 year life of the investment to a salvage value of $0. The opportunity cost of capital is 9% and the tax rate is 36%. What is operating cash flow each year?

A company sells Tidbits to consumers at a price of $120 per unit. The costs to produce Tidbits is $47 per unit. The company will sell 14,000 Tidbits to consumers each year. The fixed costs incurred each year will be $210,000. There is an initial investment to produce the goods of $3,300,000 which will be depreciated straight line over 9 year life of the investment to a salvage value of $0. The opportunity cost of capital is 9% and the tax rate is 36%. What is operating cash flow each year?

Essentials Of Investments
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
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A company sells Tidbits to consumers at a price of $120 per unit. The costs to produce Tidbits is $47 per unit. The company will sell 14,000 Tidbits to consumers each year. The fixed costs incurred each year will be $210,000. There is an initial investment to produce the goods of $3,300,000 which will be depreciated straight line over 9 year life of the investment to a salvage value of $0. The opportunity cost of capital is 9% and the tax rate is 36%. What is operating cash flow each year? Number Click "Verify" to proceed to the next part of the question.
Transcribed Image Text:A company sells Tidbits to consumers at a price of $120 per unit. The costs to produce Tidbits is $47 per unit. The company will sell 14,000 Tidbits to consumers each year. The fixed costs incurred each year will be $210,000. There is an initial investment to produce the goods of $3,300,000 which will be depreciated straight line over 9 year life of the investment to a salvage value of $0. The opportunity cost of capital is 9% and the tax rate is 36%. What is operating cash flow each year? Number Click "Verify" to proceed to the next part of the question.
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