(Calculating changes in net operating working capital)Duncan Motors is introducing a new product and has an expected change in net operating income of $290,000. Duncan Motors has a 32 percent marginal tax rate. This project will also produce $54,000 of depreciation per year. In addition, this project will cause the following changes in year 1:

Without the Project With the Project Accounts receivable $28,000 $27,000 Inventory $26,000 $42,000 Accounts payable $46,000 $88,000

What is the project's free cash flow in year 1?

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Part 1

The free cash flow of the project in year 1 is

(Round to the nearest dollar.)