Shue Music Company is considering the sale of a new sound board used in recording studios. The new board would sell for $24,300, and the company expects to sell 1,600 per year. The company currently sells 1,950 units of its existing model per year. If the new model is introduced, sales of the existing model will fall to 1,620 units per year. The old board retails for $22,700. Variable costs are 55 percent of sales, depreciation on the equipment to produce the new board will be $1,275,000 per year, and fixed costs are $3,150,000 per year. If the tax rate is 25 percent, what is the annual OCF for the project? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. Answer is complete but not entirely correct. OCF S 10,776,900
Shue Music Company is considering the sale of a new sound board used in recording studios. The new board would sell for $24,300, and the company expects to sell 1,600 per year. The company currently sells 1,950 units of its existing model per year. If the new model is introduced, sales of the existing model will fall to 1,620 units per year. The old board retails for $22,700. Variable costs are 55 percent of sales, depreciation on the equipment to produce the new board will be $1,275,000 per year, and fixed costs are $3,150,000 per year. If the tax rate is 25 percent, what is the annual OCF for the project? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. Answer is complete but not entirely correct. OCF S 10,776,900
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:Shue Music Company is considering the sale of a new sound board used in recording studios. The new board would sell for $24,300,
and the company expects to sell 1,600 per year. The company currently sells 1,950 units of its existing model per year. If the new
model is introduced, sales of the existing model will fall to 1,620 units per year. The old board retails for $22,700. Variable costs are 55
percent of sales, depreciation on the equipment to produce the new board will be $1,275,000 per year, and fixed costs are $3,150,000
per year. If the tax rate is 25 percent, what is the annual OCF for the project?
Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.
OCF
Answer is complete but not entirely correct.
$
10,776,900x
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