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JKCPA
JKCPA , CPA
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Experience:  Bachelors degree and CPA with Accounting experience.
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Cash flows from operations: Given the soaring price of fuel,

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Cash flows from operations: Given the soaring price of fuel, Fiat is considering introducing a new production line of gas-electric hybrid sedans. The expected annual sales number of such hybrid cars is 30,000; the price is €22,000 per car. Variable costs of production amount to €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 Fiat’s sales of regular cars by 10,000 cars per year; the regular cars have a unit price of €20,000 and unit variable cost of €12,000 and fixed costs of €250,000 per year. Depreciation costs of the production plant are €50,000 per year. The marginal tax rate is 40 per cent. What is the incremental annual cash flow from operations?
Submitted: 3 years ago.
Category: Finance
Expert:  JKCPA replied 3 years ago.
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