Question: KADS, Inc. has spent $450,000 on research to develop a new computer game The firm is planning to spend $250,000 on a machine to produce

 KADS, Inc. has spent $450,000 on research to develop a new

KADS, Inc. has spent $450,000 on research to develop a new computer game The firm is planning to spend $250,000 on a machine to produce the new game Shipping and installation costs of the machine will be capitalized and depreciated, they total $55,000 The machine has an expected life of three years, a $80,000 estimated resale value, and falls under the MACRS 7-year class life Revenue from the new game is expected to be $650,000 per year, with costs of $300,000 per year The firm has a tax rate of 40 percent, an opportunity cost of capital of 13 percent, and it expects net working capital to increase by $125,000 at the beginning of the project. What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!