Tetious Dimensions is introducing a new product and has an expected change in net operating income of

$785,000.

Tetious Dimensions has a

36

percent marginal tax rate. This project will also produce

$195,000

of depreciation per year. In addition, this project will cause the following changes in year1:

	Without the Project		With the Project
Accounts receivable	$59,000		$85,000
Inventory	95,000		177,000
Accounts payable	69,000		122,000

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

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Part 1

The free cash flow of the project in year 1 is

$enter your response here.

(Round to the nearest dollar.)