Question: (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
(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 $755,000. Tetious Dimensions has a 32 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 | $
59,000 |
| $
92,000 |
|
|
| Inventory | 105,000 |
| 176,000 |
|
|
| Accounts payable | 75,000 |
| 115,000 |
|
|
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.)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
Study Help