Calculating changes in net operating working capital

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(Calculating changes in net operating working capital) Duncan Motors is introducing a new product and has an expected change in net operating income of $315,000. Duncan Motors has a 36% marginal tax rate. This project will also produce $53,000 of depreciation per year. In addition, this project will cause the following changes in year 1:

Without the Project   With the Project

Accounts receivable   $30,000 $24,000

Inventory $26,000 $34,000

Accounts payable $47,000 $88,000

a) The free cash flow of the project in year 1 is $( ) (Round to the nearest dollar.)

Reference no: EM131577997

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