Sale of a new sound board used in recording studios

Reference no: EM13820309

Herrera Music Company is considering the sale of a new sound board used in recording studios. The new board would sell for $25,500, and the company expects to sell 1,400 per year. The company currently sells 1,900 units of its existing model per year. If the new model is introduced, sales of the existing model will fall to 1,720 units per year. The old board retails for $21,400. 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.

Required:

If the tax rate is 38 percent, what is the annual OCF for the project?

Reference no: EM13820309

Questions Cloud

Price of the firm common stock : A new common stock issue that paid a $1.81 dividend last year.The firms dividends are expected to continue to grow 6.7% per year forever. The price of the firm's common stock is now $27.93.

Implementing one of the policies below : Stockholders' equity will be used to finance $15 million of assets, with the remainder financed by short- and long-term debt. The organization is considering implementing one of the policies below.

Statement of cash flows : Build a solar power plant in Belarus. The assignment is to make financial statements (income statement, balance sheet, statement of cash flows) for three years for this business. The first year by month, the second and third year by quarter.

Evaluating an experimental oncology treatment : Hell's Pass Hospital is evaluating an experimental oncology treatment. The treatment is currently under review for Medicare reimbursement and legislative experts believe the treatment has a 70% chance of receiving approval for

Sale of a new sound board used in recording studios : Herrera Music Company is considering the sale of a new sound board used in recording studios. The new board would sell for $25,500, and the company expects to sell 1,400 per year. The company currently sells 1,900 units of its existing model per y..

Assume the speed of vehicles along a stretch : Assume the speed of vehicles along a stretch of I-10 has an approximately normal distribution with a mean of 71 mph and a standard deviation of 8 mph. Find the probability that the percent of 18 to 34-year-olds who check Facebook before getting out ..

Discuss the tendency of ratios to fluctuate over time : Discuss the tendency of ratios to fluctuate over time, explain how accounting practices, seasonality, economy, competitors as well as other factors can influence them, and how. Use real companies as examples. NOTE: you do not need to provide actua..

What is the maximum growth rate possible : What dividend payout ratio is necessary to achieve this growth rate under these constraints? What is the maximum growth rate possible?

Developing a sales force based on the target market : Explain the value of developing a sales force based on the target market. Use examples from each video to support your response

User Account

All Pages