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Hi Everyone, Can you tell me what is the free cash flow from years 0 to 3 for the following company?
Hi Everyone, Can you tell me what is the free cash flow from years 0 to 3 for the following company? The company's tax rate is 40% and WACC is 10%. Please show all calculations:
Lyssa's Deli is considering a three-year project to purchase a new machine press to improve their production efficiency. Six months ago, it contracted with a consultant to provide a thorough study of whether there was a need for this three-year efficiency project. The report was delivered one month ago and it's cost was $25,000. The report suggests that the company should go ahead with the project subject to Lyssa's financial analysis. Buying a new machine press for $400,000 is estimated to result in $120,000 in annual pretax cost savings. The press falls in the MACRS five-year class and it will have a salvage value at the end of the project of $85,000. At time 0, the press will also require an additional investment in inventory of $9,000. Other current accounts will not be affected.The MACRS schedule is as follows:
Year