MGMT 2023- The General Motors Corporation is introducing a new product
2. The General Motors Corporation is introducing a new product and which is expected to result in change in EBIT or $900,000. The firm has a 34 percent marginal tax rate. This product will also produce $200,000 of depreciation per year. In addition, this product will cause the followingchanges:Balance Sheet AccountWithout theproductWith the productAccounts receivable$60,000$70,000Inventory55,00065,000Accounts payable45,00050,000a. Calculate the change in net working capital? (3 points)b. Calculate the product’s change in taxes. (2 points)c. What is the product’s free cash flow? (5 points)
