Question

Vandelay Industries is considering a new project with a 4- year life with the following cost and revenue data. This project will require an investment of $ 140,000 in new equipment. This new equipment will be depreciated down to zero over 4 years using the simplified straight- line method and has no salvage value. This new project will generate additional sales revenue of $ 112,000 while additional operating costs, excluding depreciation, will be $ 68,000. Vandelay’s marginal tax rate is 35 percent. What is the project’s free cash flow in year 1?


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  • CreatedSeptember 11, 2015
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