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Johnson Communications is trying to estimate the first-year operating cash flow for a proposed project on which it has collected the following information: Sales revenues
Johnson Communications is trying to estimate the first-year operating cash flow for a proposed project on which it has collected the following information:
Sales revenues | $10.5 million |
Operating costs (excluding depreciation) | 7.1 million |
Depreciation | 2.5 million |
Interest expense | 1.2 million |
Johnsons financial staff has also determined that this project would cannibalize one of the firms other projects by $1.1 million of cash flow (before taxes) per year. Johnson has a 35 percent tax rate, and its WACC is 9 percent. Calculate the projects operating cash flow for Year 1.
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