Question
In: Finance
A company is considering a 5-year project to open a new product line. A new machine...
A company is considering a 5-year project to open a new product line. A new machine with an installed cost of $90,000 would be required to manufacture their new product, which is estimated to produce sales of $80,000 in new revenues each year. The cost of goods sold to produce these sales (not including depreciation) is estimated at 55% of sales, and the tax rate at this firm is 40%. If straight-line depreciation is used to calculate annual depreciation, what is the estimated annual operating cash flow from this project each year? (Answer to the nearest dollar.)
Solutions
Expert Solution
Solution:
The Estimated annual Operating Cash Inflow from this project each Year = $ 28,800.
Thus the Estimated annual Operating Cash Inflow from this project for each Year from Year 1 to Year 5 = $ 28,800
Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.
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