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 36,000; the price is $ 21,000 per car. Variable costs of production are $13,000 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 7,000 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 $ 52, 000 per year. The marginal tax rate is 29 percent. What is the incremental annual cash flow from operations? Incremental annual cash flow from operations?
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 36,000; the price is $ 21,000 per car. Variable costs of production are $13,000 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 7,000 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 $ 52, 000 per year. The marginal tax rate is 29 percent. What is the incremental annual cash flow from operations? 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
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Transcribed Image Text: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 36,000; the price is $ 21,000 per car.
Variable costs of production are $13,000 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 7,000 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 $
52,000 per year. The marginal tax rate is 29 percent. What is the
incremental annual cash flow from operations? Incremental annual cash
flow from operations?
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