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The following information is for the next four questions (Questions 7-10). You have been asked by the president of your company to evaluate the proposed
The following information is for the next four questions (Questions 7-10). You have been asked by the president of your company to evaluate the proposed acquisition of a piece of new equipment for the firm's R\&D department. The equipment's price is $30,000, and would be sold after 2 years for $5,000. The equipment is depreciated straight-line to zero over 2 years. Use of the equipment would require an increase in net working capital (spare parts inventory) of $4,000, which will be recovered when the equipment is sold. The equipment is expected to generate sales of $35,000 per year and operating costs (excluding depreciation) by $10,000 per year. The firm's marginal tax rate is 40%. Question 7 (1 point) What is the free cash flow of the project in Year 0 ? Your Answer: Answer Question 8 ( 1 point) What is the free cash flow of the project in Year 1 ? Your
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