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A month ago
Use the information for the question(s) below.

Temporary Housing Services Incorporated (THSI) is considering a project that involves setting up a temporary housing facility in an area recently damaged by a hurricane.  THSI will lease space in this facility to various agencies and groups providing relief services to the area.  THSI 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.  THSI will require no working capital for this investment.  THSI's marginal tax rate is 35%.  


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

▸ $8.0 million

▸ $3.75 million

▸ $6.25 million

▸ $5.0 million
Textbook 

Fundamentals of Corporate Finance

Edition: 2nd
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$6.25 million
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