Calculate the annual implications after tax

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A company has is planning to introduce a new product to its existing line. Annual sales are estimated to be 5000 units at a price of $69 per unit. Variable manufacturing costs are expected to be $39 per unit. Incremental fixed manufacturing costs (other than depreciation) are expected to be $30000 and incremental selling expenses to be $35,000 annually.

To build the new product the company must invest $200,000 in special equipment with a change in design every 5 years (no salvage value). Straight line depreciation. Company Tax 30%. All revenue will be paid in cash.

Question A) Calculate the annual implications after tax

Question B) Calculate the annual cash flow consequences over the life of the first model

Question C) Calculate:

1) ARR

2) Payback

3) NPV (15% discount value)

Reference no: EM132695500

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