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(Solved): The net capital cost for the something is $90,000 and is depreciated over over three years. if the s ...



The net capital cost for the something is $90,000 and is depreciated over over three years. if the sales is $50,000 units per year at $4.00, variable costs are $2.75 and fixed costs are $12,000 per year. the tax rate is 21% and the cost of capital is 20%. 

\begin{tabular}{lr} 
Sales ( 50,000 units at \$4.00/unit) & \( \$ 200,000 \) \\
Variable Costs (\$2.75/unit) & 137,500 \\
\cl

a.) what is thr operating cash flow? 
b.)  whats the nvp and irr?
c.)is this worth investing in or no?
\begin{tabular}{lr} Sales ( 50,000 units at \$4.00/unit) & \( \$ 200,000 \) \\ Variable Costs (\$2.75/unit) & 137,500 \\ \cline { 2 } Gross profit & \( \$ 62,500 \) \\ Fixed costs (Given) & 12,000 \\ Depreciation (\$90,000/3) & \multicolumn{2}{|c|}{30,000} \\ \cline { 2 } EBIT & \( \$ 20,500 \) \\ Taxes (21\%) & 4,305 \\ Net Income & \( \$ 16,195 \) \end{tabular}


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Step 1 of the answer to the question is as follows :- a) operating cash flow = net income + depreciation = 16195 + 30000 = 46195
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