Answer:
$283,600
Explanation:
Sales revenue = 40,000 * $19 = $760,000
Production cost = $760,000 * 40% = $304,000
Total cost = Production cost + Annual fixed production cost = $304,000 + $150,000 = $454,000
Annual depreciation expense = $250,000
Income before tax = $760,000 - $454,000 - $250,000 = $56,000
Tax = $56,000 * 40% = $22,400
Operating cash flow = Income before tax + Depreciation - Tax = $56,000 + $250,000 - $22,400 = $283,600
Therefore, the annual operating cash flow of the new GPS system is $283,600.