Problem:
A new project will generate sales of $74.5 million, costs of $42.5 million, and depreciation expense of $10.5 million in the coming year. The firm's tax rate is 30%.
Q1. Calculate cash flow for the year by using all three methods: (a) adjusted accounting profits; (b) cash inflow/cash outflow analysis; and (c) the depreciation tax shield approach. (Enter your answers in millions rounded to 2 decimal places.)
Method Cash Flow
Adjusted accounting profits $_________ million
Cash inflow/cash outflow analysis $_________ million
Depreciation tax shield approach $_________ million
Q2. Are the above answers equal?