Your company has spent $290,000 on research to develop a new computer game. The firm is planning to spend $49,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $5,900. The machine has an expected life of 5 years, a $34,000 estimated resale value, and falls under the MACRS 7-Year class life. Revenue from the new game is expected to be $390,000 per year, with costs of $190,000 per year. The firm has a tax rate of 35 percent, an opportunity cost of capital of 15 percent, and it expects net working capital to increase by $59,000 at the beginning of the project. What will be the net cash flow for year one of this project?

$132,745.82

Explanation:

required investment = $290,000 + $49,000 + $5,900 + $59,000 =  $403,900

depreciable amount = $49,000 + $5,900 = $54,900

Research and development costs are expensed, they cannot be capitalized. Increase in net working capital cannot be capitalized either.

MACRS depreciation expense for year 1 under 8 year class life = 14.29%

depreciation expense year 1 = $54,900 x 14.29% = $7,845.21

net cash flow year 1 = [($390,000 - $190,000 - $7,845.21) x (1 - 35%)] + $7,845.21 = ($192,154.79 x 0.65) + $7,845.21 = $124,900.61 + $7,845.21 = $132,745.82

i would ask my boss to do more things around the car shop. and i would slowly work my way up to working on cars and becoming a full time mechanic.

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.