Bllingham 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 partialy disrupt production. The firm has just completed a $47,000 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 $10.20 malion per year in additional sales, which will continue for the 10 -year life of the machine. - Operations: The disruption caused by the installation wil decrease saies by $4.95 million this year. As with Billinghamis 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 $1.02 million during the life of the project, including year 0. - Human Resources: The expansion will require additional sales and administrative personnel at a cost of $2.06 million per year - Accounting: The XC-750 wil be depreciated via the straight-line method over the 10 -yoar life of the machine. The firm expects receivables from the new sales to be 16% of revenues and payables to be 11% 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 XC750. c. If the appropriate cost of capital for the expansion is 9.5%, compute the NPV of the purchase a. Determine the incremental earnings from the purchase of the XC-750 Calculate the incremental eamings from the purchase of the XC-750 below (with vs. without XC7750 ) (Round to the nearest dollar) Incremental Effects (with vs. without XC750 )