After spending a year and $49,000,you finally have the design of your new product ready. In order to start production, you will need $31,000 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 $103,000. 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 25%. As you start your analysis of the product, what should be your initial incremental free cash flow? The initial incremental free cash flow is $________.(Round to the nearest dollar. Be sure to use a negative sign if the answer is negative.)
After spending a year and $49,000,you finally have the design of your new product ready. In order to start production, you will need $31,000 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 $103,000. 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 25%. As you start your analysis of the product, what should be your initial incremental free cash flow? The initial incremental free cash flow is $________.(Round to the nearest dollar. Be sure to use a negative sign if the answer is negative.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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question 15
After spending a year and $49,000,you finally have the design of your new product ready. In order to start production, you will need $31,000 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 $103,000. 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 25%.
As you start your analysis of the product, what should be your initial incremental free cash flow?
As you start your analysis of the product, what should be your initial incremental free cash flow?
The initial incremental free cash flow is $________.(Round to the nearest dollar. Be sure to use a negative sign if the answer is negative.)
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