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QUESTION 14 Use the following information to answer Questions 14 - 17. Umbrella Inc. is considering expanding one of its production facilities to research
QUESTION 14 Use the following information to answer Questions 14 - 17. Umbrella Inc. is considering expanding one of its production facilities to research a new type of virus, which will hopefully not result in another zombie outbreak. The project requires a $6,000,000 initial capital investment in an equipment which will be equally depreciated over its 3 year life. Salvage value of the equipment is $0. Incremental sales are expected to be $5,300,000 annually for the 3 year period with cash expenses equal to 40% of sales. Umbrella would also have to commit to initial net operating working capital of $3,000,000. Umbrella is subject to a 30% marginal tax rate, and requires a 12% rate of return for projects of this risk level. 14. Free Cash Flow for Year 0 is : OA.- $9,000,000 OB. $ 18,000,000 OC.- $ 6,000,000 OD.- $13,000,000 OE. $ 10,000,000 1 Click Save and Submit to save and submit. Click Save All Answers to save all answers. 80 F3 Q FA MacBook Air F5 F6 7
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