What is the project cash flow for the first year

Assignment Help Finance Basics

Reference no: EM131794470

Problem: 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 10%.

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 35%, how would that change your answer to part a? Round your answer to the nearest dollar.

The firm's project's cash flow would -Select-increasedecreaseItem 3 by $.

Reference no: EM131794470

Questions Cloud

Write two different definitions of organisational change : Identify the two, different, theoretical perspectives (ontologies or world-views) used in this subject, write two different definitions of organisational change

What exactly does peter houghtons memo say : What is meant by "analysts' independence"? When and how might analysts' independence be compromised? What pressures do analysts face that might reduce

Which type of etch equipment should be used : In a particular etch process, if selectivity is the biggest concern, which type(s) of etch equipment should be used?

What is your reflection of that ethics course : What is your reflection of that ethics course how did it shape you as a a supervisor/manager?

What is the project cash flow for the first year : 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.

Why the sidewall slope becomes more sloped : It is observed that the sidewall slope in an etch process becomes more sloped as the temperature is reduced. Why?

Difficult conversation with upper managers : When having to have a difficult conversation with upper managers, you can increase success by

Discuss the influence fixed manufacturing-overhead cost : Discuss the influence fixed manufacturing-overhead cost should have on the sales price quoted Excalibur for special orders

List ethical values that guide helena in the decision making : Helena Karmel has a 4.0 grade point average and is in her last semester at EmpireState. List the ethical values that should guide Helena in her decision making.

User Account

All Pages