Business, 20.04.2020 19:53 natebarr17

Temporary Housing Services Incorporated (THSI) is considering a project that involves setting up a temporary housing facility in an area recently damaged by a hurricane. THSI will lease space in this facility to various agencies and groups providing relief services to the area. THSI estimates that this project will initially cost $ 6 million to set up and will generate $ 23 million in revenues during its first and only year in operation (paid in one year). Operating expenses are expected to total $ 12 million during this year and depreciation expense will be another $ 2 million. THSI will require no working capital for this investment. THSI's marginal tax rate is 35%.Ignoring the original investment of $5 million, what is THSI's free cash flow for the first and only year of operation?
a. $5.0 million
b. $3.75 million
c. $8.0 million
d. $6.25 million

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