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18 Question 18 2 pts KADS, Inc. has spent $330,000 on research to develop a new computer game. The firm is planning to spend $130,000
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Question 18 2 pts KADS, Inc. has spent $330,000 on research to develop a new computer game. The firm is planning to spend $130,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $43,000. The machine has an expected life of three years, a $68,000 estimated resale value, and falls under the MACRS seven-year class life. Revenue from the new game is expected to be $530,000 per year, with costs of $180,000 per year. The firm has a tax rate of 21 percent, an opportunity cost of capital of 13 percent, and it expects net working capital to increase by $65,000 at the beginning of the project. What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) MACRS seven-year class 1:14.29% 2:24.49% 3:17.49% 4:12.49% 5:8.93% 6:8.92% 7:8.93% 8: 4.46% Year 0 FCF 2 17 1 3 Step by Step Solution
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