Question:
The upgrade will cost the firm a combined total of $23,000,000 up front, but will lower operating expenses by 4,400,000 per year forever. The firm is facing a 38% tax rate.
The market value of the equity is $304,500,000.
The cost of Equity is 19.54%.
1. What is the CF0?
2. What is the change in operating cashflow in year (after tax) CF8?