Shade Your Eyes, Inc. makes sunglasses that cost $115 per pair. They want to buy the equipment necessary to reduce their costs by $1 per pair. It will cost $350,000 and will be depreciated on a straight-line basis over the 6-year life of the machine. There is no increase in Net Working Capital for this project. The margin before is $310,900, and with the new machine, it will increase to $475,100.
The required return is 15%, and the tax rate is 40%.
You want to determine if you should buy this new equipment.
1) What is the change in Operating Cash Flow (OCF) (6 points)? Round to the nearest dollar. Get Finance Help Today
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