Top Posters
Since Sunday
6
l
6
5
n
5
N
5
m
5
j
4
s
4
4
c
4
r
4
m
4
New Topic  
Memphic Memphic
wrote...
Posts: 728
Rep: 0 0
A year ago
The free cash flow for the last year of Epiphany's project is closest to:
A) $53,000
B) $38,000
C) $35,000
D) $43,000
Textbook 

Corporate Finance: The Core


Edition: 4th
Authors:
Read 45 times
1 Reply
Replies
Answer verified by a subject expert
pbrown223pbrown223
wrote...
Posts: 439
Rep: 2 0
A year ago
Sign in or Sign up in seconds to unlock everything.
A
Explanation:  A)
Year   0   1   2   3
Sales (Revenues)      100,000   100,000   100,000
- Cost of Goods Sold (50% of Sales)      50,000   50,000   50,000
- Depreciation      30,000   30,000   30,000
= EBIT      20,000   20,000   20,000
- Taxes (35%)      7000   7000   7000
= unlevered net income      13,000   13,000   13,000
+ Depreciation      30,000   30,000   30,000
+ changes to working capital      -5000   -5000   10,000
- capital expenditures   -90,000         
= Free Cash Flow   -90,000   38,000   38,000   53,000
            
PV of FCF (FCF/(1 + I)n   -90,000   33,929   30,293   37,724
discount rate   0.12         
NPV = 11,946            
IRR = 19.14%
This verified answer contains over 240 words.
1

Related Topics

wrote...
Posts: 728
Credits: 777

A year ago
TY
wrote...
Posts: 14
Credits: 40

Yesterday
This calls for a celebration Person Raising Both Hands in Celebration
wrote...
Posts: 11
Credits: 30

Yesterday
Smart ... Thanks!
New Topic      
Explore
Post your homework questions and get free online help from our incredible volunteers.
Learn More
Improve Grades
Help Others
Save Time
Accessible 24/7
  125 People Browsing
 204 Signed Up Today
Your Opinion
Who's your favorite biologist?
Votes: 48

Previous poll results: Do you believe in global warming?
Related Images
 997
 92