Revenues generated by a new fad product are forecast as follows: Year 1 2 4 Revenues $33,981 40,000 20,000 10,000 Thereafter O Expenses are expected to be 50% of revenues, and working capital required in each year is expected to be 20% of revenues in the following year. The product requires an immediate investment of $40,000 in plant and equipment that will be depreciated using the straight-line method over 5 years. The firm recently spent $2,000 on a study to estimate the revenues of the new product. The tax rate is 20%. What is the operating cash flow in year 1? Answer to nearest whole dollar amount. 15,192
Revenues generated by a new fad product are forecast as follows: Year 1 2 4 Revenues $33,981 40,000 20,000 10,000 Thereafter O Expenses are expected to be 50% of revenues, and working capital required in each year is expected to be 20% of revenues in the following year. The product requires an immediate investment of $40,000 in plant and equipment that will be depreciated using the straight-line method over 5 years. The firm recently spent $2,000 on a study to estimate the revenues of the new product. The tax rate is 20%. What is the operating cash flow in year 1? Answer to nearest whole dollar amount. 15,192
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
Related questions
Question
Transcribed Image Text:Revenues generated by a new fad product are forecast as follows:
Year
1
2
4
Revenues
$33,981
40,000
20,000
10,000
Thereafter O
Expenses are expected to be 50% of revenues, and working capital required in each
year is expected to be 20% of revenues in the following year. The product requires an
immediate investment of $40,000 in plant and equipment that will be depreciated using
the straight-line method over 5 years. The firm recently spent $2,000 on a study to
estimate the revenues of the new product. The tax rate is 20%. What is the operating
cash flow in year 1? Answer to nearest whole dollar amount.
15,192
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