Question: Tetious Dimensions is introducing a new product that is expected to increase it net operating income by $475,000. The company has a 30% marginal tax

Tetious Dimensions is introducing a new product that is expected to increase it net operating income by $475,000. The company has a 30% marginal tax rate. This project will also produce $200,000 of depreciation per year. In addition, this project will cause the following changes:

Without the Project With the Project

Accounts Receivable $105,000 $130,000

Inventory $200,000 $280,000

Accounts Payable $90,000 $130,000

What is the projects free cash flow for year 1?

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