What is the projects free cash flow in year 1

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Reference no: EM132067431

Racin' Scooters is introducing a new product and has an expected change in EBIT of $455,000. Racin' Scooters has a 34 percent marginal tax rate.

The project will also produce $130,000 of depreciation per year. In addition, the project will also cause the following changes in year 1:

WITHOUT THE PROJECT WITH THE PROJECT ? ?

Accounts receivable ?$44,000 ? $64,000

Inventory 69,000 87,000

Accounts payable 72,000 95,000

What is the project's free cash flow in year 1?

Reference no: EM132067431

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