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What should be your initial incremental free cash flow

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Question - After spending a year and $50,000, you finally have the design of your new product ready. In order to start production, you will need $28,000 in raw materials and you will also need to use some existing equipment that you've fully depreciated, but which has a market value of $97,000.

Your colleague notes that the new product could represent 10% of the company's overall sales and that 10% of overhead is $60,000.

Your tax rate is 22%. As you start your analysis of the product, what should be your initial incremental free cash flow?

Reference no: EM133021629

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