Expected cash flows-what is the expected free cash flow

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1: Expected cash flows: FireRock Wheel Company is evaluating a project in which there is a 40 percent probability of revenues totaling $3,000,000 and a 60 percent probability of revenues totaling $1,000,000 per year. Its cash expenses will be $1,000,000 while depreciation expense will be $200,000; then what is the expected free cash flow from taking the project if the marginal tax rate for the firm is 30 percent?

2: Brown Mack, Inc., currently has two large manufacturing divisions that share a single plant. Brown Mack owns the plant but has calculated that $6,000,000 of overhead expenses should be allocated to the two equal-sized divisions. If Brown Mack starts a third manufacturing division, of equal size to the other two divisions, then what overhead cost should the new division take into account on its capital budgeting cash flow analysis?

3: If you are deciding whether to take one project or another, where the projects have different useful lives, then you could utilize:

A. an equivalent sample path analysis.

B. an equivalent annual tax return analysis.

C. an equivalent annual cost analysis.

D. an equivalent annual concussion analysis.

Reference no: EM131348216

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