Reference no: EM132615878
Swindler Ltd has completed a feasibility study costing $19,007 to determine if there is any benefit in purchasing a new asset. The machine will cost $250,249 and an additional $12,156 will need to be spent to have the machine in operational state. Before the machine can be used staff must be trained at a further cost of $6,076.
The project is expected to last for 5 years and the Taxation Office has confirmed this. At the end of the project the machine will be fully depreciated.
Initial advertising costs are expected to $27,135 and additional stock of $62,018 will be needed. Wages will change from $85,000 to $35,926 and Fixed Costs will remain at $57,900.
The new machine is expected to produce sales of $1,341,890 in the first year and will grow by 12% each year of the project. Material costs will be 22% of sales in each year.
You are required to calculate the net cash flow (round to the nearest dollar and DO NOT include $ sign) that would appear in Year 1 of a Capital Budget.
Assume the Australian Company tax Rate applies.