Solution to free cash flow

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Reference no: EM1343433

Solution to Free Cash Flow

Analysts expect a project to generate EBIT of $500,000 per year for 5 years. Depreciation expense is expected to be $150,000 per year and the corporation's tax rate is 40%. The project will require an increase in net working capital of $50,000 in year one and a decrease in net working capital of $25,000 in year five. What is the free cash flow from the project in year one?

A) $250,000
B) $450,000
C) $400,000
D) $100,000

Reference no: EM1343433

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