Anderson Group Inc. is starting a new project which will las…
Anderson Group Inc. is starting a new project which will last for four years. In year 1, the firm is expecting sales of $400,000 and costs of goods sold (COGS) are expected to be 80% of sales. The project will require $20,000 in fixed costs per year and an initial capital expenditure with depreciation expenses of $5,000 per year. No incremental changes in net working capital will be required. Anderson Group Inc. faces a marginal tax rate of 40%. What is the Incremental Free Cash Flow (FCF) of the project in year 1? (Hint: Round your answer to the nearest integer, i.e., no decimal points.)
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