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Calculate the change in net working capital

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Reference no: EM132904727

Cost of the new project $4,000,000

Installation costs $100,000

Estimated unit sales in year 150,000

Estimated unit sales in year 2 75,000

Estimated unit sales in year 3 40,000

Estimated sales price in year 1 $150

Estimated sales price in year 2 $175

Estimated sales price in year 3 $160

Variable cost per unit $120

Annual fixed cost $50,000

Additional working capital needed $435,000

Depreciation method 3 years straight-line method, no salvage value

Texas Rok's tax rate 40%

Texas Rok's cost of capital 13%

Problem 1: Calculate operating cash flow and the change in net working capital.

Reference no: EM132904727

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