# Calculating changes in net operating working​ capital)  Duncan Motors is introducing a new product and has an expected change in net operating income of ​\$300,000. Duncan Motors has a 34 percent marginal tax rate. This project will also produce ​\$50,000 of depreciation per year. In​ addition, this project will cause the following changes in year​ 1:                                 Without the Project     With the ProjectAccounts receivable \$33,000                        \$23,000Inventory                  \$25,000                        \$40,000Accounts payable     \$50,000                        \$86,000The free cash flow of the project in year 1 is ​\$ (Round to the nearest​ dollar.)

Question
Asked Nov 11, 2019
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Calculating changes in net operating working​ capital)

Duncan Motors is introducing a new product and has an expected change in net operating income of ​\$300,000. Duncan Motors has a 34 percent marginal tax rate. This project will also produce ​\$50,000 of depreciation per year. In​ addition, this project will cause the following changes in year​ 1:

Without the Project     With the Project
Accounts receivable \$33,000                        \$23,000
Inventory                  \$25,000                        \$40,000
Accounts payable     \$50,000                        \$86,000

The free cash flow of the project in year 1 is ​\$

(Round to the nearest​ dollar.)

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Step 1

Calculate the increase in net working capital as follows:

Step 2

Calculate the free-cash ...

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