1.

2.

(Related to Checkpoint 12.1) (Calculating changes in net operating working capital) Tetious Dimensions is introducing a new product and has an expected change in net operating income of $780,000 Tetious Dimensions has a 36 percent marginal tax rate. This project will also produce $215,000 of depreciation per year. In addition, this project will cause the following changes in year 1: With the Project Accounts receivable Inventory Accounts payable Without the Project $60,000 94,000 75,000 $86.000 179,000 124,000 The free cash flow of the project in year 1 is $. (Round to the nearest dollar.) (Calculating changes in net operating working capital) Duncan Motors is introducing a new product and has an expected change in net operating income of $310,000. Duncan Motors has a 31 percen marginal tax rate. This project will also produce $46,000 of depreciation per year. In addition, this project will cause the following changes in year 1: With the Project Accounts receivable Inventory Accounts payable Without the Project $31,000 27,000 49,000 $19,000 37,000 80,000 The free cash flow of the project in year 1 is $. (Round to the nearest dollar.)