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Apple Inc. is purchasing a new machine in order to make smartphone chips. It will cost $10.40 millions to buy the machine and $3.50 millions
Apple Inc. is purchasing a new machine in order to make smartphone chips. It will cost $10.40 millions to buy the machine and $3.50 millions to have it delivered and installed. The machine is expected to raise revenues by $6.00 million per year, starting at the end of the first year, with associated costs of $4.50 millions for each of those years. The machine is expected to have a working life of 7 years, will be fully depreciated by straight-line depreciation over those 7 years, and will have no salvage value. The tax rate is 10%. What are the incremental free cash flows associated with the new machine in year 6? O $1.549 million O $-0.437 million $2.836 million O $13.900 million
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