1. Company ABC, Inc.'s new project has estimated revenue $8000 million, costs amount to 40% of...

 

 

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1. Company ABC, Inc.'s new project has estimated revenue $8000 million, costs amount to 40% of revenues. The project also has depreciation expense $400 million. a) (5 points) Calculate Operating Cash Flow for the project. Assume corporate marginal tax rate 20%. b) (5 points) The project will last 3 years. The company has estimated final free cash flows (FCF) for the project as follows. When you review the report, you found that your company has hired a consulting company and paid $1 million consulting fee to evaluate this project. Additionally, the project will use a building which could otherwise be rented for $500 million per year (Free Cash Flow equivalent) (at t=1,2,3). Years 0. 1 3 Free Cash flows (Unit: Millions) -6,000 2,500 2,500 3,200 Re-estimate free cash flows for the project given this new collected information. 1. Company ABC, Inc.'s new project has estimated revenue $8000 million, costs amount to 40% of revenues. The project also has depreciation expense $400 million. a) (5 points) Calculate Operating Cash Flow for the project. Assume corporate marginal tax rate 20%. b) (5 points) The project will last 3 years. The company has estimated final free cash flows (FCF) for the project as follows. When you review the report, you found that your company has hired a consulting company and paid $1 million consulting fee to evaluate this project. Additionally, the project will use a building which could otherwise be rented for $500 million per year (Free Cash Flow equivalent) (at t=1,2,3). Years 0. 1 3 Free Cash flows (Unit: Millions) -6,000 2,500 2,500 3,200 Re-estimate free cash flows for the project given this new collected information.

Answer rating: 100% (QA)

a b Revenue Costs 800040 Depreciation NOI Tax at 20 NOPAT Depreciation Operating cas... View the full answer