KADS, Inc. is planning to spend $300,000 on a machine to produce the new game. The...

 

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KADS, Inc. is planning to spend $300,000 on a machine to produce the new game. The machine has an expected life of three years, a $100,000 estimated resale value at the end of year 3, and will be depreciated straight-line to zero. Revenue from the new game is expected to be $600,000 per year, with costs of $250,000 per year. The firm has a tax rate of 30 percent, and it expects net working capital to increase by $110,000 at the beginning of the project (no more increases are anticipated). What will the year 2 free cash flow for this project be? KADS, Inc. is planning to spend $300,000 on a machine to produce the new game. The machine has an expected life of three years, a $100,000 estimated resale value at the end of year 3, and will be depreciated straight-line to zero. Revenue from the new game is expected to be $600,000 per year, with costs of $250,000 per year. The firm has a tax rate of 30 percent, and it expects net working capital to increase by $110,000 at the beginning of the project (no more increases are anticipated). What will the year 2 free cash flow for this project be?

Answer rating: 100% (QA)

Statement showing free cash flow is given in the table below Particulars Amount Revenue from new ga... View the full answer