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PS6 - $7 million Depreciation $2 million Interest expense...

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PS6 Fin 332 Submit PS6 solution (as a group) at the beginning of class on Monday, April 14 . To receive credit you need to make a reasonable effort to solve the problems. Also, your work needs to be clear and organized. Please staple the pages together. (1) N C is trying to estimate the first-year operating cash flow (at t = 1) for a proposed project. The financial staff has collected the following information: Proposed sales $10 million Operating costs (not including depreciation)
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Unformatted text preview: $7 million Depreciation $2 million Interest expense $2 million The company faces a 40% tax rate. What is the project’s operating cash flow for the first year (t = 1)? (2) CAL is now in the terminal year of a project. The equipment originally cost $20 million, of which 80% has been depreciated. CAL can sell the used equipment today to another airline for $5 million, and its tax rate is 40%. What is the equipment’s after-tax net salvage value?...
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