KADS, Inc. has spent $360,000 on research to develop a new computer game. The fi

Question

KADS, Inc. has spent $360,000 on research to develop a new computer game. The firm is planning to spend $196,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $46,000. The machine has an expected life of three years, a $71,000 estimated resale value, and falls under the MACRS seven-year class life. Revenue from the new game is expected to be $596,000.00 per year, with costs of $246,000.00 per year. The firm has a tax rate of 35 percent, an opportunity cost of capital of 0 percent, and it expects net working capital to increase by $96,000.00 at the beginning of the project.

What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. Omit the "$" sign in your response.)

What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. Omit the "$" sign in your response.)

Explanation / Answer

Hi,

My previous answer had some calculation errors. Please find the corrected answer as follows.

Related Questions

Navigate

• Browse (All)
• Browse K
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.