What is the free cash flows associated with this project

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Reference no: EM133332110

Case: Calculating free cash flows) You are considering new elliptical trainers and you feel you can sell 5,000 of these per year for 5 years (after which time this project is expected to shut down when it is learned that being fit is unhealthy )The elliptical trainers would sell for $1,800 each and have a variable cost of $900 each. The annual fixed costs associated with production would be $ 1,500,000 In addition, there would be a $ 5,000,000 initial expenditure associated with the purchase of new production equipment It is assumed that this initial expenditure will be depreciated using the bonus depreciation method in year This project will also require a one-time initial investment of $1,100,000 in net working capital associated with inventory, and working- capital investment will be recovered when the project is shut down Finally, assume that the firm's marginal tax rate is 24 percent

QUESTIONS a) What is the free cash flows associated with this project for years 1 ? Round to the nearest? dollar.

Reference no: EM133332110

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