What is year four net incremental cash flow

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Reference no: EM132010299

1. Operating income for Fake Company Gamma (FCG) in 2017 is projected to be $7.8 million. If the company's EBIT is the same as operating income, and if its tax rate is estimated at 28%, what is NOPAT?

a) about $5.6 million

b) about $2.2 million

c) $7.8 million

2. A capital budgeting project analysis at your firm currently shows Year 4 operating income of $400,000 million and depreciation of $100,000. If the relevant tax rate is 40.0%, what is Year 4 net incremental cash flow?

a) $500,000

b) $340,000

c) $240,000

3. After the last year of your project’s time frame, which is Year 6, you believe cash flows will grow at about 5.0% per year forever. An initial estimate of Year 6 net incremental cash flow is $2 million. What is the cash flow expected to be in Year 7?

a) $30.0 million

b) $2.5 million

c) $2.1 million

Reference no: EM132010299

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