Racin' Scooters is introducing a new product and has an expected change in EBIT of $425,000. Racin' Scooters has a 33 percent marginal tax rate. The project will produce $90,000 of depreciation per year. In addition, the project will cause the following changes in year 1:
What is theproject's free cash flow in year 1?
WITHOUT THE PROJECT WITH THE
Accounts receivable 44,000 62,000
Inventory 65,000 89,000
Accounts payable 75,000 93,000