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3) A firm considers to buy a machine in 2020. The cost of that machine is $ 5 000 000. The firm uses 5 year

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3) A firm considers to buy a machine in 2020. The cost of that machine is $ 5 000 000. The firm uses 5 year straight line depreciation which allows it to write off $ 1 000 000 depreciation expense each year. The firm is subject to 20% corporate tax rate. The firm's revenue in 2021 is expected to be $ 6 000 000 if the investment is not done. The revenue will be $ 9 000 000 if the investment is done. The firm's total costs (including both COGS and General&Administrative Costs) will be $ 4 000 000 if the investment is not done. The total costs will be $ 5 500 000 if the investment is done. Also the following information is given for the year 2021 Without Investment With Investment Inventories $ 300 000 $ 500 000 Acc. Receivables $ 200 000 $ 300 000 Acc. Payables $ 100 000 $ 150 000 Given the above information; calculate the free cash flow of that investment for the years 2020 and 2021

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