Research to develop new computer game

Assignment Help Financial Management

Reference no: EM13929457

KADS, Inc., has spent $420,000 on research to develop a new computer game. The firm is planning to spend $220,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $52,000. The machine has an expected life of three years, a $77,000 estimated resale value, and falls under the MACRS 7-year class life. Revenue from the new game is expected to be $620,000 per year, with costs of $270,000 per year. The firm has a tax rate of 40 percent, an opportunity cost of capital of 13 percent, and it expects net working capital to increase by $110,000 at the beginning of the project. What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)

Reference no: EM13929457

Questions Cloud

Describe how this company manages economic : If you work for a publically traded company, download the company’s annual report. If you don’t work for a publically traded company, download the annual report of one of your favorite products (e.g. Apple or Dell). Search through the report and look..

Breakeven analysis-better care clinic historical financial : Better Care Clinic (Breakeven Analysis) Fairbanks Memorial Hospital, an acute care hospital with 300 beds and 160 staff physicians, is one of 75 hospitals owned and operated by Health Services of America, a for-profit, publicly owned company. Using t..

Critical feature for understanding speech : Which is the most critical feature for understanding speech as it is spoken...

Analyze effects of global disaster on financial statements : Financial Report: For this part of the assessment, you will prepare a financial report in response to a hypothetical scenario: A major global disaster (in this case an oil spill) has caused environmental damage and has affected global transportation ..

Research to develop new computer game : KADS, Inc., has spent $420,000 on research to develop a new computer game. The firm is planning to spend $220,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $52..

Weight used for equity in the computation : OMG Inc. has 5 million shares of common stock outstanding, 4 million shares of preferred stock outstanding, and 6,000 bonds. Suppose the common shares are selling for $18 per share, the preferred shares are selling for $27 per share, and the bonds ar..

Clinic projected to make profit-forecasted profit : Using this historical data I need to construct a forecasted profit and loss statement for the clinic's averday day for all of 2009 assuming the status quo. (no changes in utilizization, is the clinic projected to make a profit?)

Successful brand with the name top goal : Creative Solutions, Inc. has a successful brand with the name Top Goal. The market size in which Top Goal competes is $2 billion, and Top Goal has generated sales of $150 million. It has a contribution margin of 30%. Both brands (Top Goal and Peak Go..

What is the internal rate of return for the project : A project has an initial outlay of $2,774. It has a single cash flow at the end of year 4 of $4,755. What is the internal rate of return (IRR) for the project? The Black Bird Company plans an expansion. The expansion is to be financed by selling $61..

User Account

All Pages