Problem
Richard Pangestu, a CFO at the company, is trying to estimate the cash flow of a project. These companies are subject to a tax rate of 40% and a WACC of 10%. Staff in the finance department provide the following information:
Sales IDR 12.000.000
Operating costs (without depreciation) IDR 9.000.000
Depreciation IDR 1.750.000
Help Richard to:
1. Determine cash flow projections in the first year (t = 1)
2. Determine cash flow projections in the first year if the tax rate is reduced by 5%.