A firm is considering the purchase of a machine which would represent an investment of $31...
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A firm is considering the purchase of a machine which would represent an investment of $31 million, and would be depreciated in a straightline basis over 4 years. Sales are expected to be $14 million per year, and operating costs 49% of sales. The company is currently paying $3 million in interest per year, has a tax rate of 40%, and a WACC of 10%. What is the company's free cash flow for year 1 of this project? Enter your answer in millions of dollars, rounded to 1 decimal, and without the dollar sign. For example, if your answer is 10.5678, enter 10.6. Use the minus sign ('-') if cash flow is negative. A firm is considering the purchase of a machine which would represent an investment of $31 million, and would be depreciated in a straightline basis over 4 years. Sales are expected to be $14 million per year, and operating costs 49% of sales. The company is currently paying $3 million in interest per year, has a tax rate of 40%, and a WACC of 10%. What is the company's free cash flow for year 1 of this project? Enter your answer in millions of dollars, rounded to 1 decimal, and without the dollar sign. For example, if your answer is 10.5678, enter 10.6. Use the minus sign ('-') if cash flow is negative.
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Answer rating: 100% (QA)
To calculate the companys free cash flow for year 1 of this project we need to take into account the following 1 Sales Revenue 2 Operating Costs 3 Dep... View the full answer
Related Book For
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Posted Date:
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