Solution-What will be the net cash flow for year one of the

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

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Question 1: Your company has spent $220,000 on research to develop a new computer game. The firm is planning to spend $42,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $5,200. The machine has an expected life of 7 years, a $27,000 estimated resale value, and falls under the MACRS 10-Year class life. Revenue from the new game is expected to be $320,000 per year, with costs of $120,000 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 $52,000 at the beginning of the project. What will be the net cash flow for year one of this project?

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

Reference no: EM132570356

Reference no: EM132570356

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