Canyon Buff Corp. is considering launch a project Pi to expand the production of a new construction
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Question:
Canyon Buff Corp. is considering launch a project Pi to expand the production of a new construction chemical. The production line which will be placed in a warehouse that the company could have otherwise rented out for $20,000 per year. They will borrow $200,000 from Amarillo National Bank at an interest rate of 5% per annum for this project.
The projected financials for the levered project in Year 1 are as follows:
- sales will be 100,000
- cost of goods sold will be 15,000
- SG&A expense will be 5,000
- annual depreciation will be 25,000
- interest costs will be $30,000 resulting from the project
- average tax rate is 20% and marginal tax rate is 30%
- increase in net working capital will be 12,000
The unlevered free cash flow in Year 1 will be $______.
Related Book For
Intermediate Accounting
ISBN: 978-0176509736
10th Canadian Edition, Volume 1
Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,
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