Bitingham Packaging is considering expanding its production capacity by purchasing a new machine, the XC-750. The cost of the XC-750 is $2.78 million. Unfortunately, installing this machine will take several months and will partially disrupt production. The fom has just completed a 545,000 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 generato $10.15 milion per year in additional sales, which will continue for the 10-year Ho of the machine Operation: The disruption caused by the instalation will decrease sales by $6.02 miltion this year. As with Billingham's existing products, the cost of goods for the products produced by the XC-750 is expected to be 70% of their sale price. The increased production will also require increased Inventory on hand of $1.07 milion 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-ine method over the 10-year ile of the machine. The firm expects receivables from the new sales to be 14% of revenues and payables to be 9% of the cost of goods sold Billingham's marginal corporate tax rate is 21% a. Determine the incrementalarnings from the purchase of the XC-750 b. Determine the free cash flow from the purchase of the XC-750 e. If the aborrate cost of capital for the expansion is 102%. compute the NPV of the surchase Determine the incremental earnings from the purchase of the XC-750 Calcate the incremental amnings from the purchase of the XC-760 below (with v. without XC9760)(Round to the nearest dolur) Incremental Elects with vs without XC-750) Year 0 1.10 Sales Revenues Cost of Goods Sold the XC-750 is expected to be 70% of their sale price. The increased production will also require increased inventory on hand of $107 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 deprecated via the straight-ine 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 9% of the cost of goods sold. Bdingham'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 10.2%, compute the NPV of the purchase d. While the expected new salos will be $10.15 million per year from the expansion estimates range from $8.20 million to 512.10 million. What is the NPV in the worst case in the best case? . What is the break-even level of new sales from the expansion? What is the breakeven level for the cost of goods sold? 1. Billingham could instead purchase the XC-900, which offers even greater capacity. The cost of the XC-900 54,09 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 $10.15 milion expected for the XC 750) per year in those years would justify purchasing the larger machine? a. Determine the incremental earnings from the purchase of the XC-750 Calculate the incremental camings from the purchase of the XC-750 below (with vs without XC9750): (Round to the nearest dollar) Incremental Effects (with vs. without XC-750) Year 0 1-10 Sales Revenues 5020000 Cost of Goods Sold Submit quiz 1-10 in handen wilde in the life of the part including an Determine the incremental earnings from the purchase of the XC-750. Calculate the incremental earnings from the purchase of the XC-750 below (with us, without XC750): (Round to the nearest dollar) Incremental Effects (with vs. without XC-750) Year 0 Sales Rovences -5020000 $ Cont of Gooda Soid S. G, and A Expenses Depreciation 0 EBIT Toces at 21% Unlevered Net Income b. Determine the free cash flow from the purchase of the XC-750 Calculate the free cash flow from the purchase of the XC-750 below (with vs without XC7750): (Note: the change in not working capital for your o equal to the sum of the change in accounts receivable due to the decrease in sales, the change in inventory due to the crease in inventory starting in year, and the change in accounts payable due to the decrease in cont 5 11 b. Determine the free cash flow from the purchase of the XC-750 Calculate the free cash flow from the purchase of the XC-750 below (with vs without XC7760) (Note: the change in not working capital for year o in 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, 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) Year 10 Unilevered Not Income Depreciation Capital Expenditures Change in Not Working Capital Free cash flow c. If the appropriate cost of capital for the expansion is 102%.compute the NPV of the purchase The NPV of the purchase is $. (Round to the nearest dolar) - we will be $10.15 million per year from the expansion estimates range from $8 20 million to $12.10 million What is the NPV in the worst case in the best c. If the appropriate cost of capital for the expansion is 10.2%, compute the NPV of the purchase. The NPV of the purchase is $(Round to the nearest dollar) d. While the expected new sales will be $10.15 million per year from the expansion, estimates range from $8 20 million to $12.10 milion. What is the NPV in the worst case in the best case? The NPV of the purchase for sales of $8 20 million is $(Round to the nearest dollar) The NPV of the purchase for sales of $12.10 million is $(Round to the nearest dollar) e. What is the break-even level of new sales from the expansion? The break even level of new sales from the expansion in $. (Round to the nearest dollar) What is the breakeven tevel for the cost of goods sold? The breakeven tevel for the cost of goods sold of (Round to two decimat places) t. Bllingham could instead purchase the XC-900, which offers even greater capaony. The cost of the XC-900 $4,00 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 $10.15 milion expected for the XC-750) per year in those years would justly when the marine Submit quiz t. Billingham could instead purchase the XC-900, which offers even greater capacity. The cost of the XC-600 is 3409 milloh operation, but would allow for additional sales in years through 10. What level of additional sales (above the $10.15 million expected for the XC-750) per year in those years would justry purchasing the larger machine? The additional sales would need to be (Round to the nearest dollar) Submit quiz Bitingham Packaging is considering expanding its production capacity by purchasing a new machine, the XC-750. The cost of the XC-750 is $2.78 million. Unfortunately, installing this machine will take several months and will partially disrupt production. The fom has just completed a 545,000 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 generato $10.15 milion per year in additional sales, which will continue for the 10-year Ho of the machine Operation: The disruption caused by the instalation will decrease sales by $6.02 miltion this year. As with Billingham's existing products, the cost of goods for the products produced by the XC-750 is expected to be 70% of their sale price. The increased production will also require increased Inventory on hand of $1.07 milion 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-ine method over the 10-year ile of the machine. The firm expects receivables from the new sales to be 14% of revenues and payables to be 9% of the cost of goods sold Billingham's marginal corporate tax rate is 21% a. Determine the incrementalarnings from the purchase of the XC-750 b. Determine the free cash flow from the purchase of the XC-750 e. If the aborrate cost of capital for the expansion is 102%. compute the NPV of the surchase Determine the incremental earnings from the purchase of the XC-750 Calcate the incremental amnings from the purchase of the XC-760 below (with v. without XC9760)(Round to the nearest dolur) Incremental Elects with vs without XC-750) Year 0 1.10 Sales Revenues Cost of Goods Sold the XC-750 is expected to be 70% of their sale price. The increased production will also require increased inventory on hand of $107 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 deprecated via the straight-ine 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 9% of the cost of goods sold. Bdingham'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 10.2%, compute the NPV of the purchase d. While the expected new salos will be $10.15 million per year from the expansion estimates range from $8.20 million to 512.10 million. What is the NPV in the worst case in the best case? . What is the break-even level of new sales from the expansion? What is the breakeven level for the cost of goods sold? 1. Billingham could instead purchase the XC-900, which offers even greater capacity. The cost of the XC-900 54,09 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 $10.15 milion expected for the XC 750) per year in those years would justify purchasing the larger machine? a. Determine the incremental earnings from the purchase of the XC-750 Calculate the incremental camings from the purchase of the XC-750 below (with vs without XC9750): (Round to the nearest dollar) Incremental Effects (with vs. without XC-750) Year 0 1-10 Sales Revenues 5020000 Cost of Goods Sold Submit quiz 1-10 in handen wilde in the life of the part including an Determine the incremental earnings from the purchase of the XC-750. Calculate the incremental earnings from the purchase of the XC-750 below (with us, without XC750): (Round to the nearest dollar) Incremental Effects (with vs. without XC-750) Year 0 Sales Rovences -5020000 $ Cont of Gooda Soid S. G, and A Expenses Depreciation 0 EBIT Toces at 21% Unlevered Net Income b. Determine the free cash flow from the purchase of the XC-750 Calculate the free cash flow from the purchase of the XC-750 below (with vs without XC7750): (Note: the change in not working capital for your o equal to the sum of the change in accounts receivable due to the decrease in sales, the change in inventory due to the crease in inventory starting in year, and the change in accounts payable due to the decrease in cont 5 11 b. Determine the free cash flow from the purchase of the XC-750 Calculate the free cash flow from the purchase of the XC-750 below (with vs without XC7760) (Note: the change in not working capital for year o in 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, 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) Year 10 Unilevered Not Income Depreciation Capital Expenditures Change in Not Working Capital Free cash flow c. If the appropriate cost of capital for the expansion is 102%.compute the NPV of the purchase The NPV of the purchase is $. (Round to the nearest dolar) - we will be $10.15 million per year from the expansion estimates range from $8 20 million to $12.10 million What is the NPV in the worst case in the best c. If the appropriate cost of capital for the expansion is 10.2%, compute the NPV of the purchase. The NPV of the purchase is $(Round to the nearest dollar) d. While the expected new sales will be $10.15 million per year from the expansion, estimates range from $8 20 million to $12.10 milion. What is the NPV in the worst case in the best case? The NPV of the purchase for sales of $8 20 million is $(Round to the nearest dollar) The NPV of the purchase for sales of $12.10 million is $(Round to the nearest dollar) e. What is the break-even level of new sales from the expansion? The break even level of new sales from the expansion in $. (Round to the nearest dollar) What is the breakeven tevel for the cost of goods sold? The breakeven tevel for the cost of goods sold of (Round to two decimat places) t. Bllingham could instead purchase the XC-900, which offers even greater capaony. The cost of the XC-900 $4,00 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 $10.15 milion expected for the XC-750) per year in those years would justly when the marine Submit quiz t. Billingham could instead purchase the XC-900, which offers even greater capacity. The cost of the XC-600 is 3409 milloh operation, but would allow for additional sales in years through 10. What level of additional sales (above the $10.15 million expected for the XC-750) per year in those years would justry purchasing the larger machine? The additional sales would need to be (Round to the nearest dollar) Submit quiz