You are evaluating a project for your company. You estimatethe sale price to be $10 per unit and volume to be 3000 units in year 1 and 10,000 units in yr 2 1000 in year 3. The project has a 3 year life. Variable costs amount to $3 er unit and a fixed cost of $25,000 per year. The project requires an initial investment of $36,000 in assets will which will be a straight line depreciated to zero over a 3 year project life. The actual market value of these asssets at the end of year 3is expected to be $40,000. NWC requirements at the beginning of each yearis approximately 20% of the projected sales during the coming year. Thetax rate is 40% and the required returnon the project is 13%.
What will year 2 free cash flow for the project be?