part A

part B

mate the first-year cash flow (at Year 1) for a proposed project. The assets required for the project were fully depreciated at the time of purchase. The financial staff has collected the following information on the project: Sales revenues $10 million Operating costs 8 million Interest expense 2 million The company has a 25% tax rate, and its WACC is 10% Write out your answers completely. For example, 13 million should be entered as 13,000,000 a. What is the project's operating cash flow for the first year (t = 1)? Round your answer to the nearest dollar $ b. If this project would cannibalize other projects by $0.5 fillion 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 OCF would now be $ A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: 2 3 4 Projects -$1,000 $880.52 $260 $5 $15 Project L -$1,000 $5 $240 $380 $870.59 The company's WACC is 8.0%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places. %