NPV. Grady Precision Measurement Tools has forecasted the following sales and costs for a new GPS system: annual sales of 46,000units at $17 a unit, production costs at 37% of sales price, annual fixed costs for production at $200,000. The company tax rate is 40%.What is the annual operating cash flow of the new GPS system? Should Grady Precision Measurement Tools add the GPS system to itsset of products? The initial investment is $1,400,000 for manufacturing equipment, which will be depreciated over six years (straight line)and will be sold at the end of five years for $380,000. The cost of capital is 10%.What is the annual operating cash flow of the new GPS system?(Round to the nearest dollar.)

1. Annual Revenue Calculation: Annual sales volume ( times ) Price per unit 46,000 units times…

Answered: NPV. Grady Precision Measurement Tools…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 13P

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