(Calculating free cash flows) Spartan Stores is expanding operations with the introduction of a new distribution center.

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Calculating Free Cash Flows Spartan Stores Is Expanding Operations With The Introduction Of A New Distribution Center 1 (41.67 KiB) Viewed 26 times

(Calculating free cash flows) Spartan Stores is expanding operations with the introduction of a new distribution center. Not only will sales increase but investment in inventory will decline due to increased efficiencies in getting inventory to showrooms. As a result of this new distribution center, Spartan expects a change in EBIT of $900,000. Although inventory is expected to drop from $85,000 to $62,000, accounts receivables are expected to climb as a result of increased credit sales from $89,000 to $180,000. In addition, accounts payable are expected to increase from $69,000 to $85,000. This project will also produce $300,000 of bonus depreciation in year 1 and Spartan Stores is in the 36 percent marginal tax rate. What is the project's free cash flow in year 1? The project's free cash flow in year 1 is $ 860000. (Round to the nearest dollar.)