Use the Information for the Question(s)below

question 11

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 35%.
-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)$6.25 million

---

Definitions:

Cells

The basic building blocks of all living organisms, ranging from single-celled bacteria to complex multicellular animals and plants.

Earth

The third planet from the Sun, characterized by its vast oceans, diverse ecosystems, and unique ability to support life.

Actin Filaments

Protein filaments in muscle cells and other cells that are primarily involved in the contraction and movement processes.

Intermediate Filaments

A component of the cytoskeleton in eukaryotic cells, providing mechanical support and playing a role in cell integrity and structure.