$($Lecture $6-$ Capital Budgeting Part I$)$

ABC Corp. is evaluating a project to develop new packaging tapes. The project requires capital expenditure of $$113,000$ today $($Year $0).$

The projected financials in Year $1$ are as follows:

incremental sales for the project will be $$60,000.$

incremental cost of goods sold will be $$16,000.$

incremental selling general and administrative expenses will be $$4,000.$

the annual depreciation expense for the equipment required by the project will be $$25,000.$

average tax rate is $20\%$ and marginal tax rate is $30\%.$

Given the following net working capital levels for Years $0$ to $2,$ Your estimate of Year $0$ free cash flow is:

the level of net working capital $($NWC$)$ in Year $0=$$$9,000,$ Year $1NWC$ level $=$$$18,000,$ Year $2NWC$ level $=$$$32,000$

Hints:

The question asks Year $0$ FCF$,$ not Year $1$ FCF$.$ You might need to use some information provided in the Year $1$ forecast.

Don't input $ sign and comma sign, Just input numbers.

Pay attention to the sign of your input. E$.$g$.,$ if you have a cash inflow of $$1,000,$ then you just input $$1,000.$ If you have a cash outflow of $$1000,$ then you should input $-1000.$ questions.

Instruction: Type ONLY your numerical answer in the unit of dollars. Round to the nearest integer. Don't input $ sign or comma sign.