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Question 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?

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Question

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?

 
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