You are trying to estimate the incremental after-tax cash flow for an investment analysis for ChemCare, a specialty chemical company. You have been provided with the operating income for the first year of the project:

- Revenues $ 350million

- Cost of goods sold $ 150million

- Depreciation $ 70 million (Includes $10 million depreciation on existing assets)

- Allocated overhead $ 80 million (50% of this is a fixed cost)

- EBIT $ 50 million

-Taxes $ 20 million

- Oper. Inc after tax $ 30 million

It is estimated that accounts receivable will increase by $ 45 million and accounts payable by $ 25 million during the year, while inventory will be unchanged. The firm has a capital maintenance investment that is 10% of revenues. Estimate the incremental after-tax cash flow in year 1.

a.

45

b.

75

c.

65

d.

55

e.

85