Mary’s Pub wants to determine a more accurate estimate of her free cash flows by making the
following assumptions for the project:
Projected Annual Revenue of $200,000
Annual Operating Expenses of $150,000 (no Cost of Goods Sold)
A straight line depreciation of 3 years applied to the $100,000 Initial Outlay
A 20% tax rate
There is no increase in supplies, inventory, accounts payable or any other changes in working
capital.
What is the total initial outlay and the annual free cash flows?
IO =
EBITDA = Revenue Less Operating Expenses
Less
Less
Net Income =
FCF Year 1 =
FCF Year 2 =
FCF Year 3 =