Question: The Spectramatic approved a 4-year project that requires an initial investment of $72 million for the equipment and working capital of $4 million. The project
The Spectramatic approved a 4-year project that requires an initial investment of $72 million for the equipment and working capital of $4 million. The project will generate the following figures for each year during the life of the project Sales of $40 million, Operating Expenses of $3 million and Depreciation and Amortization charges of $18 million. The firm uses straight-line depreciation and sets the book value of the equipment at the final year to be zero, but the market value of the equipment is expected to be $4 million at the end of the project. The marginal tax rate for Spectramatic is 30% What is the Free Cash Flow of the project in year 4 (the final year of the project)? 0 $36.58 million O $13.30 million O $38.10 million O $35.81 million $41.15 million
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