Billingham Packaging is considering expanding its production capacity by purchasing a new machine, the XC750. T1 cost of the XC-750 is $2.83 million. Unfortunately, installing this machine will take several months and will partially disrupt production. The firm has just completed a $45,000 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 $10.05 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 $4.92 million this year. As with Billingha existing products, the cost of goods for the products produced by the XC- 750 is expected to be 74% of their sale pric. The ncreased production will also require increased inventory on hand of $1.01 million during the life of the project, incluc year 0. - Human Resources: The expansion will require additional sales and administrative personnel at a cost of $1.91 milli per year. - Accountina: The XC-750 will be debreciated via the straiaht-line method over the 10-vear life of the machine. The fi a. Determine the incremental earnings from the purchase of the XC-750. Calculate the incremental earnings from the purchase of the XC-750 below (with vs. without XC?750 ): (Round to the nearest dollar.) Incremental Effects (with vs. without XC-750) b. Determine the free cash flow from the purchase of the XC750. Calculate the free cash flow from the purchase of the XC-750 below (with vs. without XC?750 ): (Note: the change in net working capital for year 0 is equal to the sum of the change in accounts receivable due to the decrease in sales, the change in inventory due to the increase in inventory starting in year 0 , and the change in accounts payable due to the decrease in cost of goods sold.) (Round to the nearest dollar.) Incremental Effects (with vs. without XC-750) Billingham Packaging is considering expanding its production capacity by purchasing a new machine, the XC750. T1 cost of the XC-750 is $2.83 million. Unfortunately, installing this machine will take several months and will partially disrupt production. The firm has just completed a $45,000 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 $10.05 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 $4.92 million this year. As with Billingha existing products, the cost of goods for the products produced by the XC- 750 is expected to be 74% of their sale pric. The ncreased production will also require increased inventory on hand of $1.01 million during the life of the project, incluc year 0. - Human Resources: The expansion will require additional sales and administrative personnel at a cost of $1.91 milli per year. - Accountina: The XC-750 will be debreciated via the straiaht-line method over the 10-vear life of the machine. The fi a. Determine the incremental earnings from the purchase of the XC-750. Calculate the incremental earnings from the purchase of the XC-750 below (with vs. without XC?750 ): (Round to the nearest dollar.) Incremental Effects (with vs. without XC-750) b. Determine the free cash flow from the purchase of the XC750. Calculate the free cash flow from the purchase of the XC-750 below (with vs. without XC?750 ): (Note: the change in net working capital for year 0 is equal to the sum of the change in accounts receivable due to the decrease in sales, the change in inventory due to the increase in inventory starting in year 0 , and the change in accounts payable due to the decrease in cost of goods sold.) (Round to the nearest dollar.) Incremental Effects (with vs. without XC-750)