Question: Persimmon Processing Inc. is considering a project to expand its food processing facility. The expansion would allow the firm to sell an additional $15.5 million

Persimmon Processing Inc. is considering a project to expand its food processing facility. The expansion would allow the firm to sell an additional $15.5 million of finished product in the first year of the projects life. Operating costs are expected to be 65% of sales. Persimmon has a tax rate of 40%. Assume the depreciation expense in the first year of the project would be 20% of the $12 million initial investment. What is the estimated after-tax cash flow for the project in the first year?

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