Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Year o Year 1 Year 2 Year 3 Revenues - Cost of Goods Sold - Depreciation = EBIT 500,000 500,000 500,000 -150,000 -150,000 -150,000 -

image text in transcribed
image text in transcribed
Year o Year 1 Year 2 Year 3 Revenues - Cost of Goods Sold - Depreciation = EBIT 500,000 500,000 500,000 -150,000 -150,000 -150,000 - 100,000 -100,000 -100,000 250,000 250,000 250,000 -87,500 -87,500 -87,500 162,500 162,500 162,500 100,000 100,000 100,000 100,000 -20,000 -20,000 -20,000 - Taxes (35%) = Unlevered net income + Depreciation - Additions to Net Working Capital - Capital Expenditures -300,000 = Free Cash Flow 242,500 242,500 242,500 Suppose Visby Rides changes it depreciation schedule to the MACRS schedule shown below. Year o 1 2 3 MACRS Depreciation Rate 33.33% 44.45% 14.81% 7.41% a) (8 points) Forecast Visby Rides' free cash flows (FCFS) in year 0-3 under the MACRS depreciation schedule. Visby Rides' FCF is expected to be $ in year 0, $ in year 1, $ in year 2, and $ in year 3. State your answer to the nearest integer

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Regulation In The Global Economy

Authors: Richard J. Herring , Robert E. Litan

1st Edition

0815791550, 9780815752837, 9780815791553

More Books

Students also viewed these Finance questions

Question

Family basic steps to socialization write a short note ?

Answered: 1 week ago

Question

What does physics deal with?

Answered: 1 week ago

Question

Enumerate the qualities of a salesman.

Answered: 1 week ago