(Calculating changes in net operating working capital) Visible Fences is introducing a new product and has an expected change in net operating income of $900,000. The company has a 34 percent marginal tax rate. This project will also produce $300,000 of depreciation per year. In addition, this project will cause the following changes:

What is the project’s free cash flow for Year 1?

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Accounts receivable Inventory Accounts payable Without the Project $55,000 55,000 90,000 With the Project $ 63,000 70,000 106,000