Operating cash flow. Huffman Systems has forecasted sales for its new home alarm systems to be 63,000 units per year at $38.50 per unit. The cost to pro- duce each unit is expected to be about 42% of the sales price. The new product will have an additional $494,000 of fixed costs each year, and the manufactur- ing equipment will have an initial cost of $2,400,000 and will be depreciated over eight years (using straight-line depreciation). The company tax rate is 40%. What is the annual operating cash flow for the alarm systems if the pro- jected sales and price per unit are constant over the next eight years?

Operating cash flow. Huffman Systems has forecasted sales for its new home alarm systems to be 63,000 units per year at $38.50 per unit. The cost to pro- duce each unit is expected to be about 42% of the sales price. The new product will have an additional $494,000 of fixed costs each year, and the manufactur- ing equipment will have an initial cost of $2,400,000 and will be depreciated over eight years (using straight-line depreciation). The company tax rate is 40%. What is the annual operating cash flow for the alarm systems if the pro- jected sales and price per unit are constant over the next eight years?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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