Revenues generated by a new fad product are forecast as follows: ...
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Finance
| Revenues generated by a new fad product are forecast as follows: |
| Year | Revenues |
| 1 | $45,744 |
| 2 | 40,000 |
| 3 | 20,000 |
| 4 | 10,000 |
| Thereafter | 0 |
| Expenses are expected to be 50% of revenues, and working capital required in each year is expected to be 20% of revenues in the following year. The product requires an immediate investment of $40,000 in plant and equipment that will be depreciated using the straight-line method over 5 years. The firm recently spent $2,000 on a study to estimate the revenues of the new product. The tax rate is 20%. What is the operating cash flow in year 1? Answer to nearest whole dollar amount. |
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