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Racin' Scooters is introducing a new product and has an expected change in EBIT of $455,000. Racin' Scooters has a 34 percent marginal tax rate.

Racin' Scooters is introducing a new product and has an expected change in EBIT of $455,000. Racin' Scooters has a 34 percent marginal tax rate. The project will also produce $130,000 of depreciation per year. In addition, the project will also cause the following changes in year 1:

WITHOUT THE PROJECT

WITH THE PROJECT

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Accounts receivable

$44,000

$64,000

Inventory

69,000

87,000

Accounts payable

772,000

95,000

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

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