CALCULATING CHANGES IN NET OPERATING WORKING CAPITAL 708

(Calculating changes in net operating working capital) Tetious Dimensions is introducing a new product that is expected to increase its net operating income by $775,000. Tetious Dimensions has a 34 percent marginal tax rate. This project will also produce $200,000 of depreciation per year. In addition, this project will cause the following changes:
Without the Project With the Project
Without the Project With the Project
Accounts receivable $ 55,000 $ 89,000

Inventory 100,000 180,000

Accounts payable 70,000 120,000

What is the project’s free cash flow for Year 1?