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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 $16 million in year 1. By how much would the free cash flow in year 1 change as a result? Express your result in S-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 5 millions) Sales 132 Cost of sales 40 Selling, general and administrative expenses 7 Depreciation 26 Increase in Net Working Capital 5 Capital expenditures 32 Marginal corporate tax rate 22%
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