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KADS, Inc., has spent $400,000 on research to develop a new computer game. The firm is planning to spend $50,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $50,000. The machine has an expected life of three years, a $75,000 estimated resale value, and falls under the MACRS five-year class life. Revenue from the new game is expected to be $500,000 per year, with costs of $200,000 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 $100,000 at the beginning of the project. What will the year 2 free cash flow for this project be?
Hypnosis
A trance-like mental state induced by a hypnotist, characterized by heightened focus, suggestibility, and relaxation.
Encoding-Specificity
A principle stating that memory recall is most effective when information available at the time of encoding is also present at the time of retrieval.
Word Pairs
is a cognitive task involving the linking of two words together, often used to test memory or associative learning.
Recall
The act of retrieving information or memory from the past, which can vary in effort depending on how the information was encoded and stored.
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