What will be the net cash flow for year one of this project

Assignment Help Financial Management

Reference no: EM131067928

Your company has spent $1,000,000 on research to develop a new computer game. The firm is planning to spend $500,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $75,000. The machine has an expected life of 3 years, a $100,000 estimated resale value, and falls under the MACRS 5-Year class life. Revenue from the new game is expected to be $2,000,000 per year, with costs of $800,000 per year. The firm has a tax rate of 35 percent, an opportunity cost of capital of 12 percent, and it expects net working capital to increase by $300,000 at the beginning of the project. What will be the net cash flow for year one of this project?

Reference no: EM131067928

Questions Cloud

Identify qualities that you believe are important for friend : Identify qualities that you believe are most important for a friend to possess. Is there a characteristic that you consider important that is not mentioned in the text?

Share with an ex-dividend date : Your portfolio is 150 shares of Davis, Inc. The stock currently sells for $76 per share. The company has announced a dividend of $1.45 per share with an ex-dividend date of April 19. Assuming no taxes, how much will your stock be worth on April 19?

Different types of advance directives : Discuss the different types of advance directives and the pros and cons of each. Do you have an advance directive? Has what you have learned this unit caused you to consider the need for one? Why or why not?

What is the portfolios expected return : A portfolio is invested 15 percent in Stock G, 60 percent in Stock J, and 25 percent in Stock K. The expected returns on these stocks are 10 percent, 15 percent, and 22 percent, respectively. What is the portfolio's expected return?

What will be the net cash flow for year one of this project : Your company has spent $1,000,000 on research to develop a new computer game. The firm is planning to spend $500,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total ..

Understanding of professional ethics : Review thoroughly the AHIMA Code of Ethics on page 348 of the Health Information Management text. Apply your understanding of professional ethics and the appropriate professional code of conduct using the ethical decision-making matrix on page 355..

What is equivalent cost per mile for the new company cars : A company’s technicians do many service calls to their customers’ sites and have been using their own cars, for which the company reimburses them at a rate of $0.56 per mile. A technician travels an average of 35,000 miles per year. If the interest r..

What is the full meaning of url : 1. What is the full meaning of URL? 2. What is a computer program? 3.What is the full meaning of CRT? 4. Name any three web security exploits?

Write an essay about the movie the morality of war : Write an essay about the movie The morality of war (we kill, we don't murder), Dealing with death (treatment of replacements), The sergeant and kids (mateo, the little girl and the boy at the camp) and Rage overcomes reluctance.

User Account

All Pages