Question
I need help with this solution. Chemtec is undertaking a project that will require an upfront investment today in net working capital, and plant and
I need help with this solution.
Chemtec is undertaking a project that will require an upfront investment today in net working capital, and plant and equipment (i.e., capital expenditures) of$100million and$200million, respectively. If there are no revenues or expenses expected until next year, what is the project's free cash flow today in millions of dollars?
*Make sure to input all currency answers without any currency symbols or commas, and use two decimal places of precision.
Problem 2. ChemTech - Free Cash Flow 1
Continuing from Problem 1, at the end of the first year, Chemtec is expecting sales of$250million and costs of$125million. There are no more required investments in either net working capital or plant and equipment. However, the existing plant and equipment will experience$50million of depreciation.
Assume that Chemtec's marginal tax rate on earnings is35%.
Assuming that all of these cash flow occur at the end of the first year, what is the first year's free cash flow?
*Make sure to input all currency answers without any currency symbols or commas, and use two decimal places of precision.
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