Reference no: EM131723127

Qusetion: Suppose a business borrower projects that it will experience net profits of $2.1 million, compared to $23 million the previous year, and will record depreciation and other noncash expenses of $0.7 million this year versus $0.6 million last year What is this firm's projected cash flow for this year? Is the firm's ' cash flow rising or falling? What are the implications for a lending institution thinking of loaning money to this firm? Suppose sales revenue rises by $0.5 million, cost of goods sold decreases by $0.3 million, while cash tax payments increase by $0.1 million and noncash expenses decrease by $0.2 mil-lion. What happens to the firm's cash flow? What would be the lender's likely reaction to these events?