A Firm Is Considering a New Project That Will Generate

question 85

Multiple Choice

A firm is considering a new project that will generate cash revenue of $1,000,000 and cash expenses of $700,000 per year for five years.The equipment necessary for the project will cost $200,000 and will be depreciated straight line over four years.What is the expected free cash flow in the second year of the project if the firm's marginal tax rate is 35%?

• A)$195,000
• B)$162,500
• C)$212,500
• D)$245,000

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Definitions:

Safety and Security

The condition of being protected from or not exposed to danger, and the feeling of being safe and not likely to be endangered or harmed.

Big Five

The Big Five is a model describing human personality traits through five broad dimensions: openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Personality Traits

Enduring characteristics or qualities that constitute an individual's unique and consistent patterns of feeling, thinking, and behaving.

Esteem Needs

Refers to the need for respect, self-esteem, and respect from others, constituting one of the higher levels in Maslow's hierarchy of needs.