Solution-Net cash flow for year one of project

Net cash flow for year one of project

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Your company has spent $390,000 on research to develop a new computer game. The firm is planning to spend $59,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $6,900. The machine has an expected life of 10 years, a $44,000 estimated resale value, and falls under the MACRS 15-Year class life. Revenue from the new game is expected to be $490,000 per year, with costs of $290,000 per year. The firm has a tax rate of 30 percent, an opportunity cost of capital of 12 percent, and it expects net working capital to increase by $69,000 at the beginning of the project. What will be the net cash flow for year one of this project?

Reference no: EM131693220

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Net cash flow for year one of project

Reference no: EM131693220

Reference no: EM131693220

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