(Calculating free cash flows)

Racin' Scooters is introducing a new product and has an expected change in EBIT of $475,000.Racin' Scooters has a 34 percent marginal tax rate. Bonus depreciation will be $210,000 n year 1. In addition, the project will cause the following changes in year 1?

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

WITHOUT THE PROJECT WITH THE PROJECT Accounts receivable 42,000 63,000 Inventory 65,000 83,000 Accounts payable 77,000 95,000