Kads inc has spent 470000 on research to develop a new


KADS, Inc., has spent $470,000 on research to develop a new computer game. The firm is planning to spend $270,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $57,000. The machine has an expected life of three years, a $82,000 estimated resale value, and falls under the MACRS 7-year class life. Revenue from the new game is expected to be $670,000 per year, with costs of $320,000 per year. The firm has a tax rate of 40 percent, an opportunity cost of capital of 11 percent, and it expects net working capital to increase by $135,000 at the beginning of the project. What will the cash flows for this project be?

Request for Solution File

Ask an Expert for Answer!!
Financial Management: Kads inc has spent 470000 on research to develop a new
Reference No:- TGS02650101

Expected delivery within 24 Hours