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Racin' Scooters is introducing a new product and has an expected change in EBIT of $445,000. Racin' Scooters has a 32 percent marginal tax rate.

Racin' Scooters is introducing a new product and has an expected change in EBIT of $445,000. Racin' Scooters has a 32 percent marginal tax rate. The project will produce $120,000 of depreciation per year. In addition, the project will cause the following changes in year 1:

WITHOUT THE PROJECT

WITH THE PROJECT

Accounts receivable

$46,000

$66,000

Inventory

69,000

84,000

Accounts payable

74,000

97,000

.

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

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