Question: KADS, Inc., has spent $420,000 on research to develop a new computer game. The firm is planning to spend $220,000 on a machine to produce

KADS, Inc., has spent $420,000 on research to develop a new computer game. The firm is planning to spend $220,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $52,000. The machine has an expected life of three years, a $77,000 estimated resale value, and falls under the MACRS 7-year class life. Revenue from the new game is expected to be $620,000 per year, with costs of $270,000 per year. The firm has a tax rate of 40 percent, an opportunity cost of capital of 13 percent, and it expects net working capital to increase by $110,000 at the beginning of the project.

What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)

Year 0 1 2 3
FCF $ $ $ $

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