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A firm is considering taking a project that will produce $12.5 million of revenue per year. Cash expenses will be $6 million, and depreciation expenses
A firm is considering taking a project that will produce $12.5 million of revenue per year. Cash expenses will be $6 million, and depreciation expenses will be $1.2 million per year. The project would also reduce the cash revenues of an existing project by $0.8 million. What is the free cash flow on the project, per year, if the firm is in the 40 percent marginal tax rate?
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A) | $2.4 million |
B) | $3.4 million |
C) | $2.9 million |
D) | $3.9 million |
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