ANSWER ALL

1a.

1b.

(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 $760,000. Tetious Dimensions has a 30 percent marginal tax rate. This project will also produce $220,000 of depreciation per year. In addition, this project will cause the following changes in year 1: Without the Project With the Project Accounts receivable $57,000 $91,000 Inventory 103,000 182,000 Accounts payable 65,000 117,000 (Click on the icon in order to copy its contents into a spreadsheet.) What is the project's free cash flow in year 1? 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 32 percent marginal tax rate. This project will also produce $54,000 of depreciation per year. In addition, this project will cause the following changes in year 1: Without the Project With the Project Accounts receivable $37,000 $27,000 Inventory 22,000 34,000 Accounts payable 48,000 88,000 (Click on the icon in order to copy its contents into a spreadsheet.) What is the project's free cash flow in year 1? The free cash flow of the project in year 1 is $ (Round to the nearest dollar.)