Project Beta is a project which will last for 5 years and which requires an initial outlay of $4,000.  This outlay will be depreciated using straight-line depreciation over the life of the project.  It will generate incremental revenue of $2600 per year.  The value of incremental, after-tax earnings is $888 per year.  The project will require Net Working Capital equal to 10% of incremental revenue. What is the value of incremental free cash flow in Years 1 to 5?

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Q: 16

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A:

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.