Racin' Scooters is introducing a new product and has an expected change in EBIT of $455,000. Racin' Scooters has a 34 percent marginal tax rate.
The project will also produce $130,000 of depreciation per year. In addition, the project will also cause the following changes in year 1:
WITHOUT THE PROJECT WITH THE PROJECT ? ?
Accounts receivable ?$44,000 ? $64,000
Inventory 69,000 87,000
Accounts payable 72,000 95,000
What is the project's free cash flow in year 1?