(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 $980,000. Although inventory is expected to drop from
$82,000 to $69,000, accounts receivables are expected to climb
as a result of increased credit sales from $87,000 to $81,000.
In addition, accounts payable are expected to increase from
$65,000 to $81,000. This project will also produce $200,000 of
bonus depreciation in year 1 and Spartan Stores is in the 31
percent marginal tax rate. What is the project's free cash flow in
year 1?
(Calculating free cash flows) Spartan Stores is expanding operations with the introduction of a new distribution cente
-
- Site Admin
- Posts: 899603
- Joined: Mon Aug 02, 2021 8:13 am