A three-year project has a depreciation expense of $60,000, initial NWC of $50,000, increases in NWC...

 

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A three-year project has a depreciation expense of $60,000, initial NWC of $50,000, increases in NWC of $20,000 in year one, 30,000 in year two, and - $100,000. The annual sales are 200,000 units sold at $10 per unit and variable costs are $6 per unit, and fixed costs at $200,000. If the tax rate is 25%, calculate the FCF in year three (not including the ATSV). A three-year project has a depreciation expense of $60,000, initial NWC of $50,000, increases in NWC of $20,000 in year one, 30,000 in year two, and - $100,000. The annual sales are 200,000 units sold at $10 per unit and variable costs are $6 per unit, and fixed costs at $200,000. If the tax rate is 25%, calculate the FCF in year three (not including the ATSV).

Answer rating: 100% (QA)

To calculate the FCF in year three we need to calculate the operating cash flow OCF and the capital ... View the full answer