What will be the net cash flow for year one of project

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Reference no: EM131579376

Your company has spent $240,000 on research to develop a new computer game. The firm is planning to spend $44,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $5,400. The machine has an expected life of 3 years, a $29,000 estimated resale value, and falls under the MACRS 5-Year class life. Revenue from the new game is expected to be $340,000 per year, with costs of $140,000 per year. The firm has a tax rate of 30 percent, an opportunity cost of capital of 14 percent, and it expects net working capital to increase by $54,000 at the beginning of the project. What will be the net cash flow for year one of this project?

Reference no: EM131579376

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