Solution-What will the cash flows for this project be

What will the cash flows for this project be

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KADS, Inc., has spent $430,000 on research to develop a new computer game. The firm is planning to spend $230,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $53,000. The machine has an expected life of three years, a $78,000 estimated resale value, and falls under the MACRS 7-year class life. Revenue from the new game is expected to be $630,000 per year, with costs of $280,000 per year. The firm has a tax rate of 40 percent, an opportunity cost of capital of 12 percent, and it expects net working capital to increase by $115,000 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: EM131472918

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What will the cash flows for this project be

Reference no: EM131472918

Reference no: EM131472918

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