Question
(Calculating changes in net operating working capital) Tetious Dimensions is introducing a new product that is expected to increase its net operating income by $775,000.
(Calculating changes in net operating working capital) Tetious Dimensions is introducing a new product that is expected to increase its net operating income by $775,000. Tetious Dimensions has a 34 percent marginal tax rate. This project will also produce $200,000 of depreciation per year. In addition, this project will cause the following changes: Without the Project With the Project Without the Project With the Project Accounts receivable $ 55,000 $ 89,000 Inventory 100,000 180,000 Accounts payable 70,000 120,000 What is the project?s free cash flow for Year 1?
(Calculating changes in net operating working capital) Tetious Dimensions is introducing a new product that is expected to increase its net operating income by $775,000. Tetious Dimensions has a 34 percent marginal tax rate. This project will also produce $200,000 of depreciation per year. In addition, this project will cause the following changes: Without the Project With the Project Accounts receivable Inventory Accounts payable Without the Project $ 55,000 With the Project $ 89,000 100,000 180,000 70,000 120,000 What is the project's free cash flow for Year 1Step by Step Solution
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