Question
You are considering creating a new product line in warehouse space that originally cost you $52,895 5 years ago. The required machinery would cost $6,786,
You are considering creating a new product line in warehouse space that originally cost you $52,895 5 years ago.
The required machinery would cost $6,786, should last 9 years, after which could be scrapped for $887.
Net working capital would need to immediately increase by $4,332, but could return to normal levels after 9 years.
Annual sales and operating costs are expected to be $7,097 and $1,688, respectively.
18% of customers are expected to switch over from your existing product lines.
Your firm's cost of capital (WACC) is 8.3% and effective corporate tax rate is 43%.
Your firm uses straight line depreciation as its depreciation method.
What is this project's incremental cash flow in its final year 9?
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1 B C D E F G H I J K 2 3 4 Free cash flow can be calculated as follows 5 Free Cash Flow Operating Cash Flow Capital Expenditures Change in working ca...Get Instant Access to Expert-Tailored Solutions
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