Question

.5.b - project FCF: Your company is considering a new investment of $24,000. The investment will be depreciated in a straight line manner over a four-year project life. Financial projections from associated operations are as follows: yr1 yr2 yr3 yr4 Sales Revenue $12,500 $13,000 $13,500 $10,500 Operating Costs 2,700 2,800 2,900 2,100 Working capital for years 0, 1, 2, 3 is expected to be $300, $650, $1,050, $1,350, respectively. All working capital is recovered at the end of the project. Your company faces a tax rate of 34 percent. Total free cash flows available to financial claims holders from this investment for years 0, 1, 2, 3, and 4 are: -$24,000, $8,508, $8,772, $9,036, $7,584 -$24,300, $2,158, $2,372, $2,736, $2,934 None of these values are correct. -$24,000, $2,508, $2,772, $3,036, $1,584

Answer 1