PROJECT CASH FLOW Colsen Communications is trying to estimate the first-year cash flow (at Year...
60.1K
Verified Solution
Link Copied!
Question
Accounting
PROJECT CASH FLOW
Colsen Communications is trying to estimate the first-year cash flow (at Year 1) for a proposed project. The financial staff has collected the following information on the project:
Sales revenues
$15 million
Operating costs (excluding depreciation)
10.5 million
Depreciation
3 million
Interest expense
3 million
The company has a 40% tax rate, and its WACC is 12%.
Write out your answers completely. For example, 13 million should be entered as 13,000,000.
What is the project's cash flow for the first year (t = 1)? Round your answer to the nearest dollar. $_____?
If this project would cannibalize other projects by $1.5 million of cash flow before taxes per year, how would this change your answer to part a? Round your answer to the nearest dollar. The firm's project's cash flow would now be $______? .
Ignore part b. If the tax rate dropped to 30%, how would that change your answer to part a? Round your answer to the nearest dollar. The firm's project's cash flow would -INCREASE OR DECREASE?? by $______? .
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
