Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are trying to assess how different depreciation methods will affect the free cash flows of a project for you company. The current forecasts for

You are trying to assess how different depreciation methods will affect the free cash flows of a project for you company. The current forecasts for year 1 of the project are in the table below. Assume that you can decrease the depreciation expense by $10 million in year 1. By how much would the free cash flow in year 1 change as a result? Express your result in $-millions and round to two decimals (do not include the $-sign in your answer). Enter increases in free cash flows as positive numbers, decreases as negative numbers.

image text in transcribed

You are trying to assess how different depreciation methods will affect the free cash flows of a project for you company. The current forecasts for year 1 of the project are in the table below. Assume that you can decrease the depreciation expense by $10 million in year 1. By how much would the free cash flow in year 1 change as a result? Express your result in $-millions and round to two decimals (do not include the $-sign in your answer). Enter increases in free cash flows as positive numbers, decreases as negative numbers. Project Forecasts for Year 1 in $ millions) Sales 128 Cost of sales 59 Selling, general and administrative expenses 6 Depreciation 26 Increase in Net Working Capital 6 Capital expenditures 30 Marginal corporate tax rate 20%

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

Investments An Introduction

Authors: Herbert B Mayo

11th Edition

1133936520, 9781133936527

More Books

Students also viewed these Finance questions

Question

differentiate the function ( x + 1 ) / ( x ^ 3 + x - 6 )

Answered: 1 week ago