Question
A firm is considering the purchase of a machine which would represent an investment of $25 million, and would be depreciated in a straightline basis
A firm is considering the purchase of a machine which would represent an investment of $25 million, and would be depreciated in a straightline basis over 5 years. Sales are expected to be $10 million per year, and operating costs 46% of sales. The company is currently paying $3 million in interest per year, has a tax rate of 40%, and a WACC of 10%. What is the companys free cash flow for year 1 of this project?
Please, if you're going to try and answer it, show all of your work.
Spoon feed it to me. Assume I know nothing about this problem, becasue I wouldn't post about it if I found help elsewhere. Much appreciated :)
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