Your company has spent $300.000 on research to develop a new computer game. The firm is planning to spend $50.000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated, they total $6,000. The machine has an expected the of 7 years, a $35.000 estimated resale value, and falls under the MACRS 10-Year class life. Revenue from the new game is expected to be $400.000 per year, with costs of $200.000 per year. The firm has a tax rate of 21 percent, an opportunity cost of capital of 13 percent, and it expects net working capital to increase by $60.000 at the beginning of the project. What will be the net cash flow for year one br Mutiple Choice
Your company has spent $300.000 on research to develop a new computer game. The firm is planning to spend $50.000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated, they total $6,000. The machine has an expected the of 7 years, a $35.000 estimated resale value, and falls under the MACRS 10-Year class life. Revenue from the new game is expected to be $400.000 per year, with costs of $200.000 per year. The firm has a tax rate of 21 percent, an opportunity cost of capital of 13 percent, and it expects net working capital to increase by $60.000 at the beginning of the project. What will be the net cash flow for year one br Mutiple Choice
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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Give typing answer with explanation and conclusion
Transcribed Image Text:Your company has spent $300,000 on research to develop a new computer game. The firm is planning to spend $50,000 on a machine to
produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $6,000. The machine has
an expected life of 7 years, a $35.000 estimated resale value, and falls under the MACRS 10-Year class life. Revenue from the new game is
expected to be $400.000 per year, with costs of $200,000 per year. The firm has a tax rate of 21 percent, an opportunity cost of capital of 13
percent, and it expects net working capital to increase by $60,000 at the beginning of the project. What will be the net cash flow for year one br
this project?
Multiple Choice
(577)
O
$158.000
Multiple Choice
$(57,176)
$158,000
$1,176
$159,176
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