Bigham Packaging is considering and production ly by purchasing a new machine. XT60The cost of the XC.750 12.31 Unfortunately, she was several and will production. The final competed a 348.000 by study to any the decision to buy the XC-70, in the following Marker Once the XC-750 printere capacity is expected to genere 510.00 per year in addition with all of the year of the main Operation. The deponented by the nation will decreases by on a year. As with Big products, the cost of goods for the product roodbye XC 90 Hected Torp The incromed production will increased inventory on hand of mouring the thing Human bere Trees non aver conto 2017 Bring marginal corpo va ove Theme for the rest of the 10% cott/ corpo 215 #Do the incremental trom the purchase of the XT Dear the how the purchase of the XC-750 c. If the appropriate cost of cfor the pain compute the pothe purchase a. While the expected news wate 110.00 per tornare in 11 milion What is the NPV best come! .. What is the break-even level of whom the expansion? What is the relevan level for the cost of goods? L. Bringham could instead purchase the XC-600, which even greater capacity. The cost of the XC-600 is 540 million. They would not be in the year of con, but would now to store senyar Com . Billingham Packaging is considering expanding its production capacity by purchasing a new machine, the XC-750. The cost of the XC-750 is $2.81 million Unfortunately, installing this machine will take several months and will partially disrupt production. The firm has just completed a 549,000 feasibility study to analyze the decision to buy the XC-750, resulting in the following estimates Marketing Once the XC-750 is operational next year, the extra capacity is expected to generate $10.00 million per year in additional sales, which will continue for the 10-year life of the machine Operations. The disruption caused by the installation will decrease sales by S4.98 million this year. As with Billingham's existing products, the cost of goods for the products produced by the XC-750 is expected to be 73% of their sale price. The increased production will also require increased inventory on hand of $1.11 million during the life of the project, including year o Human Resources: The expansion will require additional sales and administrative personnel at a cost of $2.01 million per year Accounting The XC-750 will be depreciated via the straight-line method over the 10-year life of the machine. The firm expects receivables from the new sales to be 14% of revenues and payables to be 10% of the cost of goods sold. Billingham's marginal corporate tax rate is 21% a. Determine the incremental earnings from the purchase of the XC-750 b. Determine the free cash flow from the purchase of the XC-750. c. If the appropriate cost of capital for the expansion is 9.7%, compute the NPV of the purchase d. While the expected new sales will be 510.00 million per year from the expansion, estimates range from $8.05 million to $11.95 million. What is the NPV in the worst caso? In the best case? e. What is the break-even level of new sales from the expansion? What is the broakeven level for the cost of goods sold? 1. Bilingham could instead purchase the XC-900, which offers even greater capacity. The cost of the XC-900 is $4.06 million. The extra capacity would not be useful in the first two years of operation, but would allow for additional sales in years 3 through 10. What level of additional sales (above the $10.00 milion expected for the XC-750) per year in those years would justify purchasing the larger machine? Bigham Packaging is considering and production ly by purchasing a new machine. XT60The cost of the XC.750 12.31 Unfortunately, she was several and will production. The final competed a 348.000 by study to any the decision to buy the XC-70, in the following Marker Once the XC-750 printere capacity is expected to genere 510.00 per year in addition with all of the year of the main Operation. The deponented by the nation will decreases by on a year. As with Big products, the cost of goods for the product roodbye XC 90 Hected Torp The incromed production will increased inventory on hand of mouring the thing Human bere Trees non aver conto 2017 Bring marginal corpo va ove Theme for the rest of the 10% cott/ corpo 215 #Do the incremental trom the purchase of the XT Dear the how the purchase of the XC-750 c. If the appropriate cost of cfor the pain compute the pothe purchase a. While the expected news wate 110.00 per tornare in 11 milion What is the NPV best come! .. What is the break-even level of whom the expansion? What is the relevan level for the cost of goods? L. Bringham could instead purchase the XC-600, which even greater capacity. The cost of the XC-600 is 540 million. They would not be in the year of con, but would now to store senyar Com . Billingham Packaging is considering expanding its production capacity by purchasing a new machine, the XC-750. The cost of the XC-750 is $2.81 million Unfortunately, installing this machine will take several months and will partially disrupt production. The firm has just completed a 549,000 feasibility study to analyze the decision to buy the XC-750, resulting in the following estimates Marketing Once the XC-750 is operational next year, the extra capacity is expected to generate $10.00 million per year in additional sales, which will continue for the 10-year life of the machine Operations. The disruption caused by the installation will decrease sales by S4.98 million this year. As with Billingham's existing products, the cost of goods for the products produced by the XC-750 is expected to be 73% of their sale price. The increased production will also require increased inventory on hand of $1.11 million during the life of the project, including year o Human Resources: The expansion will require additional sales and administrative personnel at a cost of $2.01 million per year Accounting The XC-750 will be depreciated via the straight-line method over the 10-year life of the machine. The firm expects receivables from the new sales to be 14% of revenues and payables to be 10% of the cost of goods sold. Billingham's marginal corporate tax rate is 21% a. Determine the incremental earnings from the purchase of the XC-750 b. Determine the free cash flow from the purchase of the XC-750. c. If the appropriate cost of capital for the expansion is 9.7%, compute the NPV of the purchase d. While the expected new sales will be 510.00 million per year from the expansion, estimates range from $8.05 million to $11.95 million. What is the NPV in the worst caso? In the best case? e. What is the break-even level of new sales from the expansion? What is the broakeven level for the cost of goods sold? 1. Bilingham could instead purchase the XC-900, which offers even greater capacity. The cost of the XC-900 is $4.06 million. The extra capacity would not be useful in the first two years of operation, but would allow for additional sales in years 3 through 10. What level of additional sales (above the $10.00 milion expected for the XC-750) per year in those years would justify purchasing the larger machine