Question: A new project is expected to generate $800,000 in revenues, $250,000 in cash operating expenses, and depreciation expense of $150,000 in each year of its 10-year life. The corporation's tax rate is 35%. The project will require an increase in net working capital of $85,000 in year one and a decrease in net working capital of $75,000 in year ten. What is the free cash flow from the project in year one?
Question: A new project is expected to generate $800,000 in revenues, $250,000 in cash operating expenses, and depreciation expense of $150,000 in each year of its 10-year life. The corporation's tax rate is 35%. The project will require an increase in net working capital of $85,000 in year one and a decrease in net working capital of $75,000 in year ten. What is the free cash flow from the project in year one?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A new project is expected to generate $800,000 in revenues, $250,000
in cash operating expenses, and depreciation expense of $150,000 in
each year of its 10-year life. The corporation's tax rate is 35%. The
project will require an increase in net working capital of $85,000 in
year one and a decrease in net working capital of $75,000 in year ten.
What is the free cash flow from the project in year one?
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