Question

​(Calculating changes in net operating working​ capital)  Tetious Dimensions is introducing a new product and has an expected change in net operating income of

​$790 comma 000790,000.

Tetious Dimensions has a

3636

percent marginal tax rate. This project will also produce

​$180 comma 000180,000

of depreciation per year. In​ addition, this project will cause the following changes in year​ 1:

	Without the Project		With the Project
Accounts receivable	​$51 comma 00051,000		​$93 comma 00093,000
Inventory	103 comma 000103,000		181 comma 000181,000
Accounts payable	66 comma 00066,000		116 comma 000116,000

What is the​ project's free cash flow in year​ 1?

The free cash flow of the project in year 1 is

​$nothing.

Answer 1