A project requires an initial investment in equipment and machinery of $10 million. The equipment is expected
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Question:
A project requires an initial investment in equipment and machinery of $10 million. The equipment is expected to have a 5-year lifetime with no salvage value and will be depreciated on a straight-line basis. The project is expected to generate revenues of $5.1 million each year for the 5 years and have operating expenses (not including depreciation) amounting to 1/3 of revenues. The tax rate is 40%. What is the net cash flow in year 1?
- 3.40M
- 0.84M
- 2.04M
- 2.84M
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