What is ths free cash flow for the first

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Temporary Housing Services (THS) is considering a project that involves setting up a temporary housing facility in an area recently damaged by a cyclone. THS will lease space in this facility to various agencies and groups providing relief services to the area. THS estimates that this project will initially cost $5 million to set up and will generate $20 million in revenues during its first and only year in operation (paid in one year). Operating expenses are expected to total $12 million during this year and depreciation expense will be another $3 million. THS will require no working capital for this investment. THS's marginal tax rate is 30%.

Ignoring the original investment of $5 million, what is THS's free cash flow for the first and only year of operation?

Reference no: EM132507677

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