What are operating cash flows in the first year

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Problem 1: Old Tom Morrison Golf Inc. is evaluating a new product: high compression golf balls. The ball is tentatively called the "Guttie." The production line for the Guttie would be set up in an unused section of Morrison's main plant. The machinery will cost $240,000. Morrison's inventories would have to be increased by $25,000 to handle the new line. The project is expected to last 2 years with estimated EBITDA of $180,000 in each year. The machinery has an expected salvage value of $25,000 at the end of two years. Robertson's tax rate is 30%. What are operating cash flows in the first year?

Reference no: EM133000878

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