Herrera music company is ocnsidering the sale of anew sound board used in record
ID: 2673960 • Letter: H
Question
Herrera music company is ocnsidering the sale of anew sound board used in recording studios. The new board would sell for $25,500 and the company expects to sell 1400 per year. The company currently sells 1900 units of its existing model per year. If the new model is introduced, sales of the existing model will fall to 1720 units per year. The old board retails for $21400. Variable costs are 55 percent of sales, depreciation on the equipment to produce the new board will be $1,350,000 per year, and fixed costs are $1,250,000 per year. If the tax rate is 38 percent, what is the annual OCF for the project?Explanation / Answer
OCF = 8,623,592