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What is operating cash flow each year

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A company will sell Gizmos to consumers at a price of $87 per unit. The variable cost to produce Gizmos is $26 per unit. The company expects to sell 19,000 Gizmos to consumers each year. The fixed costs incurred each year will be $100,000. There is an initial investment to produce the goods of $3,400,000 which will be depreciated straight line over the 16 year life of the investment to a salvage value of $0. The opportunity cost of capital is 6% and the tax rate is 35%.

Problem 1: What is operating cash flow each year? what is the net present value of this investment? should the company accept or reject this project?

Reference no: EM132944580

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