Anderson Communications is trying to estimate the first-year cash flow (at Year 1) for a proposed project. The assets required for the project were fully
Sales Revenue: 5 million
Operating Cost: 4 million
Interest Expense: 3 million
The company has a 25% tax rate, and its WACC is 11%.
Write out your answers completely. For example, 13 million should be entered as 13,000,000.
1. What is the project's operating cash flow for the first year (t = 1)? Round your answer to the nearest dollar.
2. If this project would cannibalize other projects by $0.5 million of cash flow before taxes per year, how would this change your answer to part a? Round your answer to the nearest dollar.
The firm's OCF would now be $
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