Question

​(Calculating changes in net operating working​ capital)  Tetious Dimensions is introducing a new product and has...

​(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?

Homework Answers

Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
​(Calculating changes in net operating working​ capital)   Duncan Motors is introducing a new product and has...
​(Calculating changes in net operating working​ capital)   Duncan Motors is introducing a new product and has an expected change in net operating income of ​$280,000. Duncan Motors has a 32 percent marginal tax rate. This project will also produce ​$52,000 of depreciation per year. In​ addition, this project will cause the following changes in year​ 1: Without the Project / With the Project Accounts receivable: ​$36,000 ​/ $26,000 Inventory: $21,000 / $37,000 Accounts payable: $52,000 / $91,000 What is the​...
​(Related to Checkpoint 12.1​) ​(Calculating changes in net operating working​ capital)  Tetious Dimensions is introducing a...
​(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 comma 000755,000. Tetious Dimensions has a 3131 percent marginal tax rate. This project will also produce ​$205 comma 000205,000 of depreciation per year. In​ addition, this project will cause the following changes in year​ 1: Without the Project With the Project Accounts receivable ​$58 comma 00058,000 ​$86 comma 00086,000 Inventory 97...
​(Calculating changes in net operating working​ capital)  Duncan Motors is introducing a new product and has...
​(Calculating changes in net operating working​ capital)  Duncan Motors is introducing a new product and has an expected change in net operating income of ​$305 comma 000305,000. Duncan Motors has a 3030 percent marginal tax rate. This project will also produce ​$48 comma 00048,000 of depreciation per year. In​ addition, this project will cause the following changes in year​ 1: Without the Project With the Project Accounts receivable ​$31 comma 00031,000 ​$26 comma 00026,000 Inventory 29 comma 00029,000 35 comma...
Tetious Dimension is introducing a new product and has an expected change in net operating income...
Tetious Dimension is introducing a new product and has an expected change in net operating income of $475,000. To examine the possibility of introducing this new product, the company has performed a marketing research in the last year that has had a cost of $80,000. Tetious Dimensions. has a 34% marginal tax rate. Should the company decide to invest in this project, there will be a $100,000 depreciation expense per year. In addition, this project will cause the following changes:...
A project has an initial investment in equipment of​ $310,000 and in net working capital of​...
A project has an initial investment in equipment of​ $310,000 and in net working capital of​ $62,000. The equipment will be depreciated over the​ 3-year life of the project to a salvage value of​ $155,000. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is​ $345,000 and the discount rate is 25 percent. What is the​ project's net present value if the tax rate is 34​ percent? A. ​$380,800.00...
A project has an initial requirement of $177685 for new equipment and $9227 for net working...
A project has an initial requirement of $177685 for new equipment and $9227 for net working capital. The installation costs are expected to be $12515. The fixed assets will be depreciated to a zero book value over the 4-year life of the project and have an estimated salvage value of $135789. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is $98459 and the cost of capital is 7%...
Question. Marie's Fashions is considering a project that will require $28,000 in net working capital and...
Question. Marie's Fashions is considering a project that will require $28,000 in net working capital and initial investment of$87,000 in fixed assets. The ~project is expected to produce annual sales of $75,000 with associated costs of $57,000. The project has a 5-year life. The company uses straight-line depreciation to a zero book value over the life of the project. The tax rate is 30 percent. The required rate of return for the project is 12%. What is the operating cash...
Extremely Wild Wings (EWW) is considering introducing a new level of super hot wings called 911...
Extremely Wild Wings (EWW) is considering introducing a new level of super hot wings called 911 Wings. The 911 Wings would require a special prepartion process and new equipment. The cost of the new equipment is $50,000 and falls into the 3-Year MACRS Depreciation Class (yr 1: 33%, yr 2: 45%, yr 3: 15%, yr 4: 7%) and would require an increase in net working capital of $3,000. The expected life of the project is 3 years. EWW has already...
CHAPTER 9: NET WORKING CAPITAL A small business has the following changes in their end-of-the-month balances:...
CHAPTER 9: NET WORKING CAPITAL A small business has the following changes in their end-of-the-month balances: Nov 1 Dec 1 Cash $ 1,000 $ 2,000 Inventory $27,000 $20,500 Accounts Payable $27,500 $21,500   What is the monthly net working capital change from November 1 to December 1, and does it represent a cash inflow or cash outflow? a. The monthly net working capital change from November 1 to December 1 is +$1,000, and represents a cash inflow. b. The monthly net...
Parker Products manufactures a variety of household products. The company is considering introducing a new detergent....
Parker Products manufactures a variety of household products. The company is considering introducing a new detergent. The company's CFO has collected the following information about the proposed product. (Note: You may or may not need to use all of this information, use only the information that is relevant.) · The project has an anticipated economic life of 4 years. · The company will have to purchase a new machine to produce the detergent. The machine has an up-front cost (t...