Your company has spent $240,000 on research to develop a new computer game. The firm is planning to spend $44,000 on a machine to produce the new game Shipping and installation costs of the machine will be capitalized and depreciated; they total $5,400. The machine has an expected life of 3 years, a $29,000 estimated resale value, and falls under the MACRS 5-Year class life. Revenue from the new game is expected to be $340,000 per year, with costs of $140.000 per year. The firm has a tax rate of 21 percent, an opportunity cost of capital of 14 percent, and it expects net working capital to increase by $54.000 at the beginning of the project. What will be the net cash flow for year one of this project? Multiple Choice $(51475) $2,075 $160.075- $158.000
Your company has spent $240,000 on research to develop a new computer game. The firm is planning to spend $44,000 on a machine to produce the new game Shipping and installation costs of the machine will be capitalized and depreciated; they total $5,400. The machine has an expected life of 3 years, a $29,000 estimated resale value, and falls under the MACRS 5-Year class life. Revenue from the new game is expected to be $340,000 per year, with costs of $140.000 per year. The firm has a tax rate of 21 percent, an opportunity cost of capital of 14 percent, and it expects net working capital to increase by $54.000 at the beginning of the project. What will be the net cash flow for year one of this project? Multiple Choice $(51475) $2,075 $160.075- $158.000
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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Transcribed Image Text:Your company has spent $240,000 on research to develop a new computer game. The firm is planning to spend $44,000 on a machine to produce the new game
Shipping and installation costs of the machine will be capitalized and depreciated; they total $5,400. The machine has an expected life of 3 years, a $29,000
estimated resale value, and falls under the MACRS 5-Year class life. Revenue from the new game is expected to be $340,000 per year, with costs of $140,000 per
year. The firm has a tax rate of 21 percent, an opportunity cost of capital of 14 percent, and it expects net working capital to increase by $54.000 at the beginning of
the project. What will be the net cash flow for year one of this project?
Multiple Choice
$51475)
$2.075
$160.075
$158.000
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