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After spending a year and $50,000, you finally have the design of your new product ready. In order to start production, you will ned $25,000
After spending a year and $50,000, you finally have the design of your new product ready. In order to start production, you will ned $25,000 in raw materials and you will also ned to use some existing equipment that you have fully depreciated, but which has a market value of $100,000. Your friend notes that the new product could represent 10% of the companys overall sales and that 10% of overhead is $50,000. Your tax rate is 30%. What should be your initial incremental free cash flow?
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