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Problem: Eisenhower Communications is starving to estimate the first-year net operating cash flow (at Year 1) for a proposed project. The financial staffs have gathered the following information on the project:

874_sales revenue.jpg

The company has a 40% tax rate, and its WACC is 11%.

prepare out your answers. For instance, 13 million should be entered as 13,000,000.

problem1. What is the project's operating cash flow for first year (t = 1)?

problem2. When this project would cannibalize other projects through $1.5 million of cash flow before taxes per year, how would this change your answer to part a?

The firm's OCF would now be $

problem3. When the tax rate dropped to 30%, how would that change your answer to part a?

problem4. The firm's operating cash flow would -Select-increase decrease (decrease or increase) Item 3by $

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  • Category:- Financial Accounting
  • Reference No.:- M94036

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