Question: LONG ANSWER QUESTION - Please include your answer in your PDF document for Dropbox. Don't bother including text in D2L - the answer box below
LONG ANSWER QUESTION - Please include your answer in your PDF document for Dropbox. Don't bother including text in D2L - the answer box below will not be graded. Kuji Sushi Ltd. has a new project idea to launch a mini restaurant at the university. The company paid for an incremental earnings forecast study to run this restaurant for the next three years and the cost the company $40,000. The EBIT of this project is $350,000 next year and remains constant for the following two years. The interest expense for the debt that Kuji has to take on is $1,500 per year and the tax rate is 30%. The mini building would cost them $400,000 today and would be sold at the end of the three years for $0 and have no tax consequences. CCA deductions for the next three years will be $80,000, $128,000 and $76,800 for this project. Net working capital increases $10,000 at the end of year one for capital available during the project and is then recovered in year 3. The interest rate is 8%. Solve for the Free Cash Flow in each year
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