Question: Visby Rides, a livery car company, is considering buying some new luxury cars. After extensive research, they come up with the estimates of free cash flow from this project. The depreciation schedule is for three-year, straight-line depreciation. By how much would the net present value (NOV) of this project be increased, if the cars were depreciated by tge MACRS schedule attached given the cost of capital is 10%

K Revenues -Cost of Goods Sold - Depreciation = EBIT Year 0 Year 1 450000 Year 2 450000 - 170000 - 170000 -100,000 - 100,000 180000 180000 - Taxes (20%) - 36000 - 36000 Year 3 450000 - 170000 -100,000 180000 36000 + Depreciation = Unlevered net income Additions to Net Working Capital 144000 144000 144000 100,000 100,000 100,000 - 20,000 - 20,000 - 20,000 - Capital Expenditures -300,000 = Free Cash Flow 224000 224000 224000 Vichy Didac a livancar.comnanu in nanaid