XYZ Enterprises deciding whether to expand its production facilities. Although long-term cash flows are difficult to est

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Xyz Enterprises Deciding Whether To Expand Its Production Facilities Although Long Term Cash Flows Are Difficult To Est 1 (60.04 KiB) Viewed 98 times

XYZ Enterprises deciding whether to expand its production facilities. Although long-term cash flows are difficult to estimate, management has the following cash flow for the first years (in millions of dollars) Item Year 1 Year 2 Revenues 200 160 Cost of good sold and 50 80 operating expenses Depreciation 30 40 Increase in NWC 6 9 Capital expenditures 30 40 Marginal corporate tax rate 40% 35% A. Calculate the incremental earnings for this project for years 1 and 2? B. Calculate the free cash flows for this project for the first two years ? C. the investment of the project 10 thousand dollars and the cost of capital for this project 15%, what is your estimate of the of the value of the new project? D. If XYZ has a debt of 5 thousand dollars and its number of shares outstanding 2 thousand share what is the price of its stock?