6. KADS, Inc., spent $400,000 on research to develop a new computer game. The firm...
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6. KADS, Inc., spent $400,000 on research to develop a new computer game. The firm is planning to spend $200,000 on a machine to produce the new game. Shipping and installation cost of the machine will be capitalized and depreciated using bonus depreciation; they total $50,000. The machine has an expected life of three years and is $75,000 estimated resale value. Revenue from the new game is expected to be $600,000 per year, with cost of $250,000 per year. The firm has a tax rate of 21%, an opportunity cost of capital 15%, and expects net working capital to increase by $100,000 at the beginning of the project. What will the cash flows for this project?
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