A project promises to reduce operating expenses by $30 million per year. The project requires a...

Transcribed Image Text:

A project promises to reduce operating expenses by $30 million per year. The project requires a significant initial investment in net working capital, but in each subsequent year, the firm's net working capital will reduce by $10 million. The project requires no additional investment in fixed assets, but it does require the firm to repurpose other resources. These resources are already fully depreciated, but they were still generating approximately $10 million per year in their existing use case. You know that the firm pays taxes at a 30% rate. What is the annual free cash flow of this project? A project promises to reduce operating expenses by $30 million per year. The project requires a significant initial investment in net working capital, but in each subsequent year, the firm's net working capital will reduce by $10 million. The project requires no additional investment in fixed assets, but it does require the firm to repurpose other resources. These resources are already fully depreciated, but they were still generating approximately $10 million per year in their existing use case. You know that the firm pays taxes at a 30% rate. What is the annual free cash flow of this project?

Answer rating: 100% (QA)

To calculate the annual free cash flow of the project well need to consider the operating expenses n... View the full answer