(Calculating changes in net operating working capital) Tetious Dimensions is introducing a new product and has an expected change in net operating income of $795,000. Tetious Dimensions has a 36 percent marginal tax rate. This project will also produce $205,000 of depreciation per year. In addition, this project will cause the following changes in year 1:
Without the Project / With the Project
Accounts receivable: $50,000 / $84,000
Inventory: $97,000 / $181,000
Accounts payable: $65,000 / $119,000
What is the project's free cash flow in year 1?
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