Problem
Given the desire to cut carbon emissions, Ford is considering introducing a new production line of electric sedans. The expected annual unit sales of the electric cars are 24,000; and the selling price is $22,000 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 electric sedans will decrease Ford's sales of regular sedans by 7,000 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 new production line are $46,000 per year. The marginal tax rate is 29 percent. What is the incremental annual cash flow from operations?