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 £6 million to set up and will generate £22 million in revenues during its first and only year in operation (paid in one year). Operating expenses are expected to total £11 million during this year and depreciation expense will be another £2 million. Capital allowance is £3 million only for this year. THSI will require no working capital for this investment. THSI's tax rate is 35%. Ignoring the original investment of £6 million, what is THSI's free cash flow for the first and only year of operation? A. £6.00 million B. £8.20 million C. £7.20 million D. £7.85 million
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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 £6 million to set up and will generate £22 million in revenues during its first and only year in operation (paid in one year). Operating expenses are expected to total £11 million during this year and
depreciation expense will be another £2 million. Capital allowance is £3 million only for this year. THSI will require no working capital for this investment. THSI's tax rate is 35%.Ignoring the original investment of £6 million, what is THSI's
free cash flow for the first and only year of operation?A. £6.00 million
B. £8.20 million
C. £7.20 million
D. £7.85 million
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