Answer:
The necessary cash flow is $ 7,594,936.70.
Step-by-step explanation:
To determine the cash flow necessary before taxes and interest to support the project if $ 2 million is used to pay interest, the tax rate is 21%, and equity investors require annual income of $ 4 million, the following calculation must be performed:
X - 0.21X - 2,000,000 = 4,000,000
X - 0.21X = 4,000,000 + 2,000,000
0.79X = 6,000,000
X = 6,000,000 / 0.79
X = 7,594,936.70
Therefore, the necessary cash flow is $ 7,594,936.70.
