Research to develop a new computer game

Assignment Help Financial Management

Reference no: EM131069114

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?

Reference no: EM131069114

Questions Cloud

Find the equation of the family of circle : Find the equation of the family of circle at the intersection of x2+y2-x+3y-4=0 and x2+y2-8x-4y+10=0 through the member at point (1, -7). Find k, general form, standard form and C(h,k) & r

What is the projects average accounting return : You’re trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installation cost of $12.5 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected..

Analyzing these alternate investment vehicles : Kristin Earhardt is a 26-year-old management trainee at a large chemical company. She is single and has no plans for marriage. Her annual salary is $34, 000 (placing her in the 1 5% tax bracket), and her monthly expenditures come to approximately $1 ..

What moral issues were raised by this intervention : Humanitarian intervention in the service of human rights often involves the violation of state sovereignty, one of the most important principles of international relations. Drawing upon the discussion of the philosophical foundations in the Shesta..

Research to develop a new computer game : 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; What will the..

Informed decision making : Identify and describe an American company of your choice that is challenged in its production operations to support its basic business needs to manufacture a high quality product, safely, within budget and on schedule. Its operations management i..

What is the operating cash flow for the project : You are evaluating a project for The Tiff-any golf club, guaranteed to correct that nasty slice. You estimate the sales price of The Tiff-any to be $460 per unit and sales volume to be 1,200 units in year 1; 1,125 units in year 2; and 1,000 units in ..

Asset has had an arithmetic return : An asset has had an arithmetic return of 10.2 percent and a geometric return of 8.2 percent over the last 88 years. What return would you estimate for this asset over the next 9 years? 24 years? 40 years? (Do not round intermediate calculations. Ente..

Develop a career planning program for young adults : Determining the initial requirements to implement the program (people, funds, space, approvals, et cetera). Projecting the resources required to administer the program on a daily and weekly basis.

User Account

All Pages