Calculating the free cash flows

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Calculating the free cash flows

A firm is introducing a new product and expected change in net operating income of SAR 15000,000. Its corporate tax is 23%. The project will also produce SAR 4,000,000 depreciation per year. In addition, this cause the following changes:

Data

 

Without Project 

With Project

Accounts Receivable

375,000

550,000

Inventory

425,000

575,000

Accounts Payable

650,000

825,000

Change in EBIT

 

15,000,000

Tax rate

 

23%

Depreciation

 

4,000,000

 

 

Reference no: EM133060777

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