Use the Information for the Question(s)below

question 86

Multiple Choice

Use the information for the question(s) below.
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 $5 million to set up and will generate $20 million in revenues during its first and only year in operation (paid in one year) .Operating expenses are expected to total $12 million during this year and depreciation expense will be another $3 million.THSI will require no working capital for this investment.THSI's marginal tax rate is 21%.
-Ignoring the original investment of $5 million,what is THSI's free cash flow for the first and only year of operation?

• A)$5.0 million
• B)$3.75 million
• C)$8.0 million
• D)$6.95 million

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Definitions:

Quantitative Researchers

Individuals who conduct studies using numerical data to quantify relationships, behaviors, and attitudes.

Qualitative Researchers

Researchers who focus on understanding human behavior and the reasons that govern such behavior, using methods like interviews and observations to collect non-numerical data.

Usability Testing

The evaluation process by which users of a product are observed to determine how easy and efficient the product is to use.

Simple Random Sampling

Simple random sampling is a statistical method where every member of a population has an equal chance of being selected to form a sample, ensuring unbiased representation.