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6 July, 21:13

Kite Flite is considering making and selling custom kites in two sizes. The small kites would be priced at $12 and the large kites would be $39. The variable cost per unit is $5 and $14, respectively. Jill, the owner, feels that she can sell 1,900 of the small kites and 1,400 of the large kites each year. The fixed costs would be only $1,890 a year and the tax rate is 34 percent. What is the annual operating cash flow if the annual depreciation expense is $380?

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  1. 6 July, 21:43
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    Annual cash flow = $31010.6

    Explanation:

    Given dа ta:

    Small kites price = $12 and

    The large kites price = $39.

    The variable cost per unit of small kites is $5 and of large kites is $14

    Number of unit of small kites sells = 1900

    number of units of large kites sells = 1400

    fixed cost = $1890

    tax rate = 34%

    annual depreciation cost = $380

    Annual cash flow = [{1900 (12 - 5) + 1400 (39-14) - (1890 - 380) } * (1 - 0.34) ] + (380 * 0.34)

    Annual cash flow = $31010.6
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