4) Champagne, Inc., had revenues of $13 million, cash operating expenses of $9 million, and depreciation and amortization of $2 million during 2008. The firm purchased $650,000 of equipment during the year while increasing its inventory by $550,000 (with no corresponding increase in current liabilities). The marginal tax rate for Champagne is 25 percent. Free cash flow: What is Champagne's free cash flow for 2008?

6) Expected cash flows: FireRock Wheel Corp is evaluating a project in which there is a 40 percent probability of revenues totaling $4 million and a 60 percent probability of revenues totaling $2 million per year. Its cash expenses will be $1.0 million while depreciation expense will be $300,000. What is the expected free cash flow from taking the project if the marginal tax rate for the firm is 25 percent?

 

  

 

8) Projects with different lives: Your firm is deciding whether to purchase a high-quality printer for your office or one of lesser quality. The high-quality printer costs $45,000 and should last four years. The lesser quality printer costs $35,000 and should last three years. If the cost of capital for the firm is 14 percent, then what is the equivalent annual cost for the best choice for the firm? Round to the nearest dollar.