Shephard Industries is evaluating a proposal to expand its current distribution facilities. Management has projected...
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Shephard Industries is evaluating a proposal to expand its current distribution facilities. Management has projected that the project will produce the following cash flows for the first two years (in millions).
| Year | 1 | 2 |
| Revenues | 1200 | 1400 |
| Operating Expense | 450 | 525 |
| Depreciation | 240 | 280 |
| Increase in Working Capital | 60 | 70 |
| Capital Expenditures | 300 | 350 |
| Marginal Corporate Tax Rate | 30% | 30% |
To facilitate things, you are given the increases in Net Working Capital, not Net Working Capital
- (2 points) What is the EBIT for Shephard Industries in year 2?
- (2 points) What is the unlevered net income for Shephard Industries in year 2?
- (2 points) What is the depreciation tax shield for Shephard Industries in year 2?
- (2 points) What is the free cash flow for Shephard Industries in year 2?
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