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Globe is considering a new product with $40 million in sales and $30 million in cost of goods sold each year for the next 3 years (does not include depreciation expense). They will need a new machine that costs $9 million dollars. They will depreciate the machine to a zero book value using straight-line depreciation over 3 years. Interest expense is $1,000,000 per year. The tax rate is 25%. Determine the annual free cash flows. Years 1 through 3: $10,000,000 Years 1 through 3: $4,250,000 per year Years 1 through 3: $7,500,000 per year Years 1 through 3: $8,250,000 per year Years 1 through 3: $7,250,000 per year Globe is considering a new product with $40 million in sales and $30 million in cost of goods sold each year for the next 3 years (does not include depreciation expense). They will need a new machine that costs $9 million dollars. They will depreciate the machine to a zero book value using straight-line depreciation over 3 years. Interest expense is $1,000,000 per year. The tax rate is 25%. Determine the annual free cash flows. Years 1 through 3: $10,000,000 Years 1 through 3: $4,250,000 per year Years 1 through 3: $7,500,000 per year Years 1 through 3: $8,250,000 per year Years 1 through 3: $7,250,000 per year
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Answer is 7500000 Initial Investment 9000000 Useful L... View the full answer
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
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