Overview
I need an explanation for this Mathematics question to help me study.
Colsen Communications is trying to estimate the first-year cash flow (at Year 1) for a proposed project. The financial staff has collected the following information on the project:
Sales revenues $20 million
Operating costs (excluding depreciation) 14 million
Depreciation 4 million
Interest expense 4 million
The company has a 40% tax rate, and its WACC is 13%.
Write out your answers completely. For example, 13 million should be entered as 13,000,000.
What is the project's cash flow for the first year (t = 1)? Round your answer to the nearest dollar.