Your company has decided to produce a new line of television/electronic media pl

Question

Your company has decided to produce a new line of television/electronic media player. You estimate that your company will sell 51,000 per year, and that this product will sell for $750 each. The plant and equipment (new fixed assets) needed to manufacture this product costs $22,400,000 and will be depreciated on a straight-line basis over the seven year project. Additional manufacturing costs to produce the media players would total $16,980,000 each year. The tax rate is 40%. Sketch a simplified income statement and calculate the firm’s operating cash flow.

Explanation / Answer

Total Units 51000 Selling Price 750 38250000 Manufacturing Cost -16980000 Depreciation 22400000/7 -3200000 Income before Taxes 18070000 Less: Taxes 40% 7228000 Income after Taxes 10842000

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.