Question
Duncan Motors is introducing a new product and has an expected change in net operating income of $305,000. Duncan Motors has a 32 percent marginal
Duncan Motors is introducing a new product and has an expected change in net operating income of $305,000. Duncan Motors has a 32 percent marginal tax rate. This project will also produce $47,000 of depreciation per year. In addition, this project will cause the following changes in year 1:
| Without the Project | With the Project | |||
|---|---|---|---|---|
| Accounts receivable | $30,000 | $28,000 | ||
| Inventory | 21,000 | 35,000 | ||
| Accounts payable | 44,000 | 85,000 | ||
What is the project's free cash flow in year 1?
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The Business Credit Handbook
Authors: Mr. Reid A. Nunn
1st Edition
1500542725, 978-1500542726
