What is the value of incremental free cash flow in year 6

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Question

Project Beta is a project which will last for 5 years and which requires an initial outlay of $4,000. This outlay will be depreciated using straight-line depreciation over the life of the project. It will generate incremental revenue of $2600 per year.

The value of incremental, after-tax earnings is $888 per year. The project will require Net Working Capital equal to 10% of incremental revenue.

What is the value of incremental free cash flow in Year 6?

Reference no: EM132386801

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