Nadia Corp. is considering expansion into a new product line. The company conducted a marketing study that indicates the new product line would have sales of $650,000 per year for each of the next 3 years. Manufacturing plant and equipment for the project will cost $500,000 initially and will be depreciated according to MACRS as a five-year asset (20, 32, 19.2, 11.52, 11.52, 5.76 percent). Annual fixed costs are projected at $80,000 and variable costs are projected at 60 percent of sales. An initial investment of $60,000 in net working capital is required. The companys tax rate is 34 percent on both operations and on capital gains.

What is the dollar amount of depreciation for each year of the project?

Year 1 :

Year 2:

Year 3 :

Show the projected income statement ONLY FOR YEAR 1 of the project:

Sales:

Fixed Costs:

Variable Costs:

Depreciation:

EBIT:

Taxes:

Net Income:

What is the operating cash flow in Year 1 of the project?