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a. What are the incremental earnings for this project for years 1 and 2? (Note: Assume any incremental cost of goods sold is included as part of operating expenses.) b. What are the free cash flows for this project for years 1 and 2?

a. What are the incremental earnings for this project for years 1 and 2? (Note: Assume any incremental cost of goods sold is included as part of operating expenses.) b. What are the free cash flows for this project for years 1 and 2?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Revenues COGS and Operating Expenses (other than depreciation) Depreciation Increase in Net Working Capital Capital Expenditures Marginal Corporate Tax Rate Sales Operating Expenses Depreciation EBIT Income tax at 35% a. What are the incremental earnings for this project for years 1 and 2? (Note: Assume any incremental cost of goods sold is included as part of operating expenses.) b. What are the free cash flows for this project for years 1 and 2? ww.pensww.j Calculate the incremental earnings of this project below: (Round to one decimal place.) Incremental Earnings Forecast (millions) Unlevered Net Income 40 $ $ GA $ $ Year 1 Year 1 122.3 43.2 21.1 2.6 28.3 35% Enter any number in the edit fields and then click Check Answer. Year 2 168.4 63.8 37.3 7.8 43.5 35%
Transcribed Image Text:Revenues COGS and Operating Expenses (other than depreciation) Depreciation Increase in Net Working Capital Capital Expenditures Marginal Corporate Tax Rate Sales Operating Expenses Depreciation EBIT Income tax at 35% a. What are the incremental earnings for this project for years 1 and 2? (Note: Assume any incremental cost of goods sold is included as part of operating expenses.) b. What are the free cash flows for this project for years 1 and 2? ww.pensww.j Calculate the incremental earnings of this project below: (Round to one decimal place.) Incremental Earnings Forecast (millions) Unlevered Net Income 40 $ $ GA $ $ Year 1 Year 1 122.3 43.2 21.1 2.6 28.3 35% Enter any number in the edit fields and then click Check Answer. Year 2 168.4 63.8 37.3 7.8 43.5 35%
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