Racin’ Scooters is introducing a new product and has an expected change in EBIT of $475,000. Racin’ Scooters has a 21 percent marginal tax rate. Bonus depreciation will be $250,000 in year 1. In addition, the project will cause the following changes in year 1: WITHOUT THE PROJECT WITH THE PROJECTAccounts receivable $45,000 $63,000Inventory 65,000 80,000Accounts payable 70,000 94,000

Racin’ Scooters is introducing a new product and has an expected change in EBIT of $475,000. Racin’ Scooters has a 21 percent marginal tax rate. Bonus depreciation will be $250,000 in year 1. In addition, the project will cause the following changes in year 1: WITHOUT THE PROJECT WITH THE PROJECTAccounts receivable $45,000 $63,000Inventory 65,000 80,000Accounts payable 70,000 94,000

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 13P

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