What is the free cash flow for year 3

Assignment Help Finance Basics
Reference no: EM132491708

Premier Steel, Inc. is considering the purchase of a new machine for $110,000 that has a useful life of 3 years. The firm's cost of capital is 11% and the tax rate is 40%. This machine will be sold for its salvage value of $20,000 at the end of 3-years. The machine will require an investment of $2,500 in spare parts inventory upon installation. The machine will cost $7,500 to ship and $4,500 to install and modify it. Sales are as follows: year 1 = $90,000; year 2 = $97,500; year 3 = $105,000. Operating expenses are year 1 = $25,000; year 2 = $27,000; year 3 = $29,000. The investment in working capital will be liquidated at termination of the project at the end of year 3. What is the free cash flow for year 3?

Reference no: EM132491708

Questions Cloud

How the user experience has affected design constraints : Evaluate how the user experience has affected design constraints such as size, weight, speed, and power. Predict what changes are on the horizon.
Find the present value of the bond : Find the present value of the bond, you do not need to make the e x adjustment, simple discount at the risk free rate.
Unit 18 Civil Engineering Technology Assignment : Unit 18 Civil Engineering Technology Assignment - Explain the methods and techniques used in civil engineering for earthworks and substructures
What is front-loaded vs back-loaded methods : What is the difference between front-loaded and back-loaded methods in the context of trigger intensity required to initiate a response process?
What is the free cash flow for year 3 : The investment in working capital will be liquidated at termination of the project at the end of year 3. What is the free cash flow for year 3?
Demonstrate knowledge of subject terminology : Apply appropriate processes (design documentation and testing) and articulate the rationale for design decisions throughout the process of developing a program.
What is the market price of bond-amalgamated realty inc : Amalgamated Realty Inc. offers a 8.5 percent coupon bond with annual payments. The yield to maturity is 10.2 percent and the maturity date is 9 years from today
How does the united states compare to the united kingdom : How does the United States compare to the United Kingdom in the following areas Online Security, Freedom and Privacy on the Internet
What is right or wrong based on ones own personal sense : What is right or wrong based on one's own personal sense of how one should act based on considerations such as religion or some non-religious concept of duty.

Reviews

Write a Review

Finance Basics Questions & Answers

  Why is amazons cash cycle so much shorter than that of

answer length for each question one-half to one-page single-spaced. for q1 and q2 only1. why is amazons cash cycle so

  What is the longest time until the payable date

Dividends. Go to www.thestreet.com/dividends and find the list of dividends. How many companies went ex dividend today?

  How much do you think hulu business operations are worth

Netflix, an online video streaming service, has 29 million subscribers. It has 427 million shares outstanding, 2.4 billion in debt, 2.6 billion in cash.

  What are erna capital structure weights on book value

a. What are Erna's capital structure weights on a book value basis? b. What are Erna's capital structure weights on a market value basis?

  Draws attention and contains graphics

Submit your poster and flyer for grading. Be sure that both the poster and flyer draws attention and contains graphics.

  The important points with optimistic entrepreneurs

Assume you have decided to become a venture capitalist, but you are worried about capital losses and lower rate of return.

  Explain the pricing-to-market

explain the pricing-to-market

  Describe ways alleviate a potential shortage for retirement

Briefly discuss why retirement planning is "nothing more than cash flow planning."Briefly discuss the ramifications for an individual with insufficient funds at retirement time. Describe ways to alleviate a potential shortage for retirement.

  Determine the true statement

Determine the true statement regarding stock bonus plans and ESOPs.

  What is the nominal annual percentage cost

A firm buys on terms of 3/15, net 45. It does not take the discount, and it generally pays after 75 days. What is the nominal annual percentage cost of its non-free trade credit, based on a 365-day year?

  Key elements that must be defined in a mission statement

What are key elements that must be defined in a mission statement? What is a good example of a good mission statement?

  Various states of the economy

Noah's Landing stock is expected to produce the following returns given the various states of the economy. What is the expected return on this stock?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd