Your company has spent $360,000 on research to develop a new computer game. The firm...
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Accounting
Your company has spent $360,000 on research to develop a new computer game. The firm is planning to spend $56,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $6,600. The machine has an expected life of 3 years, a $41,000 estimated resale value, and falls under the MACRS 5-Year class life. Revenue from the new game is expected to be $460,000 per year, with costs of $260,000 per year. The firm has a tax rate of 30 percent, an opportunity cost of capital of 14 percent, and it expects net working capital to increase by $66,000 at the beginning of the project. What will be the net cash flow for year one of this project?
*Show your work
A) $140,000
B) $3,756
C) $ -66,356
D) $143,756
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