The Clayton Manufacturing Company is considering an investment in a new automated inventory system for its warehouse
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Question:
The Clayton Manufacturing Company is considering an investment in a new automated inventory system for its warehouse that will provide cash savings to the firm over the next eight years. The firms CFO anticipates additional earnings before interest, taxes, depreciation, and amortization EBITDA from cost savings equal to $ for the first year of operation of the centre; over the next seven years, the firm estimates that this amount will grow at a rate of per year. The system will require an initial investment of $ that will be depreciated over an eightyear period using straightline depreciation of $ per year and a zero estimated salvage value. The firms tax rate is and the cost of capital for the project is
What is the projects annual free cash flow FCF in year
A $ B $ C $ D $
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