KADS, Inc. has spent $300,000 on research to develop a new computer game. The firm is planning to spend $190,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated;they total $40,000. The machine has an expected life of three years, a $65,000 estimated resale value, and falls under the MACRS seven-year class life. Revenue from the new game is expected to be $590,000.00 per year, with costs of $240,000.00 per year. The firm has a tax rate of 35 percent, an opportunity cost of capital of 0 percent, and it expects net working capital to increase by $90,000.00 at the beginning of the project.
Paper#21797 | Written in 18-Jul-2015Price : $27