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Please show your work! (Calculating free cash flows) Spartan Stores is expanding operations with the introduction of a new distribution center. Not only will sales
Please show your work!
(Calculating free cash flows) Spartan Stores is expanding operations with the introduction of a new distribution center. Not only will sales increase but investment in inventory will decline due to increased efficiencies in getting inventory to showrooms. As a result of this new distribution center, Spartan expects a change in EBIT of $960,000. Although inventory is expected to drop from $87,000 to $63,000, accounts receivables are expected to climb as a result of increased credit sales from $87,000 to $140,000. In addition, accounts payable are expected to increase from $67,000 to $87,000. This project will also produce $400,000 of bonus depreciation in year 1 and Spartan Stores is in the 35 percent marginal tax rate. What is the project's free cash flow in year 1? The project's free cash flow in year 1 is $. (Round to the nearest dollar.)Step by Step Solution
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