Author Question: You estimate that if a new 4D computer graphic display product is launched by your firm, revenues ... (Read 21 times)

bobypop · **on:** Apr 25, 2021

Question 1

Using the following data, what is the change in net working capital?

Account	Change in Balance
Cash	+ $12,000
Accounts Payable	+ $21,000
Accrued Liabilities	+ $ 6,000
Depreciation	+ $10,000
Inventories	+ $24,000

◦ -$4,000
◦ -$1,000
◦ +$9,000
◦ +$19.000

Question 2

You estimate that if a new 4D computer graphic display product is launched by your firm, revenues will increase by $3,053 in the first year and 10% each year for the next 3 years. Expenses will be 50% of revenues. Depreciation is computed using MACRS for an asset with a 3-year life and a basis of $7,236. The tax rate is 40%. Compute the second year,s annual cash flows.

MACRS Depreciation Rates

Year	3-Year	5-Year
1	33.33%	20.00%
2	44.45%	32.00%

◦ $1,542
◦ $1,881
◦ $2,294
◦ $2,386
◦ $2,974

johnpizzaz · **Reply #1 on:** Apr 25, 2021

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