Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
*can you please explain how you got the answers* thank you! PROJECT CASH FLOW Colsen Communications is trying to estimate the first year cash flow
*can you please explain how you got the answers* thank you!
PROJECT CASH FLOW Colsen Communications is trying to estimate the first year cash flow (at Year 1) for a proposed project. The financial staff has collected the following information on the project: Sales revenues $15 million Operating costs (excluding depreciation) 10.5 million Depreciation 3 million Interest expense 3 million The company has a 40% tax rate, and its WACC is 13%. Write out your answers completely. For example, 13 million should be entered as 13,000,000. a. What is the project's cash flow for the first year (t = 1)? Round your answer to the nearest dollar, b. If this project would cannibalize other projects by $1.5 million of cash flow before taxes per year how would this change your answer to part a Round your answer to the nearest dollar. The firm's project's cash flow would now be $ c. Ignore part b. If the tax rate dropped to 30%, how would that change your answer to part a Round your answer to the nearest dollar The firm's project's cash flow would Select by $
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started