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QUESTION

Given the soaring price of gasoline, ford is considering introducing a new production line of gas-electric hybrid sedans. the expected annual unit sales of the hybrid cars is 22,000; the price is $25,

Given the soaring price of gasoline, ford is considering introducing a new production line of gas-electric hybrid sedans. the expected annual unit sales of the hybrid cars is 22,000; the price is $25,000 per car. variable costs of production are $10,000 per car. the fixed overhead including salary of top executives is $80 million per year. however, the introduction of the hybrid sedan will decrease ford's sales of regular sedans by 8,000 cars per year; the regular sedans have a unit price of $20,000, a unit variable cost of $12,000, and fixed costs of $250,000 per year. depreciation costs of the production plant are $48,000 per year. the marginal tax rate is 40 percent. what is the incremental annual cash flow from operations? (round answer to the nearest whole dollar,

e.g. 5,275.)

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