Reference no: EM132999399
Swindler Ltd has completed a feasibility study costing $23,399 to determine if there is any benefit in purchasing a new asset. The machine will cost $360,786 and an additional $22,588 will need to spent to have the machine in operational state. Before the machine can be used staff must be trained at a further cost of $5,141.
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 $39,292 and additional stock of $5,090 will be needed. Wages will change from $87,579 to $61,876 and Fixed Costs will remain at $55,493.
The new machine is expected to produce sales of $1,258,939 in the first year and will grow by 12% each year of the project. Material costs will be 28% 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 0 of a Capital Budget.
Assume the Australian Company tax Rate applies.
For this question, how do find the net cash flow if its asking for year 1
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