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A company is considering taking a project that will produce $12 million of revenue per year. Cash expenses will be $5 million, and depreciation expenses
A company is considering taking a project that will produce $12 million of revenue per year. Cash expenses will be $5 million, and depreciation expenses will be $1 million per year. If the company takes that project, then it will reduce the cash revenues of an existing project by $2 million. What is the free cash flow on the project, per year, if the company is in the 40 percent marginal tax rate?
Select one:
a. $4.6 millionb. $2.4 millionc. $5.0 milliond. $3.4 millionI want to know the steps for calculating.
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