Mike Mulligan wants to expand his heavy equipment business into excavation. He plans to buy...
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Mike Mulligan wants to expand his heavy equipment business into excavation. He plans to buy a used excavator for $ The excavator requires an inventory of spare parts worth $ These investments will occur immediately. Mulligan will operate the excavation business for two years and expects EBITDA of $ at the end of each year. He will close his business at the end of the second year, sell the equipment for $ and liquidate the inventory of spare parts. Mulligan pays a tax rate of Using this information, compute the appropriate values for operating cash flow, investments in net working capital, CAPEX and free cash flow for each year of the project.
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