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Calculate the initial investment outlay

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A cosmetic company is considering introducing a new lotion. The manufacturing equipment will cost $5,60,000. The expected life of the equipment is 8 year. The company is thinking of selling the lotion in a single standard pack of 50 grams at $ 12 each pack. It is estimated that variable cost per pack would be $6 and annual fixed cost $ 4,50,000. Fixed cost includes depreciation of $ 70,000 and allocated overheads of $ 30,000. The company expects to sell 1,00,000 packs of the lotion each year. Assume that tax is 40%

Problem a. Calculate the initial investment outlay

Problem b. compute the operating cash flows

Reference no: EM132755912

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