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Buhler Industries is a farm implement manufacturer. Management is currently evaluating a proposal to build a plant that will manufacture lightweight tractors. Buhler plans to
Buhler Industries is a farm implement manufacturer. Management is currently evaluating a proposal to build a plant that will manufacture lightweight tractors. Buhler plans to use a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incomplete incremental free cash flow projections (in millions of dollars): Year 0 Free Cash Flow ($000,000s) Revenues - Manufacturing expenses (other than depreciation) - Marketing expenses - CCA = EBIT - Taxes (35%) - Unlevered net income + CCA Years 1-9 Year 10 108.00 108.00 - 31.00 - 31.00 - 8.00 - 8.00 ? ? ? ? - ? ? = ? ? ? ? Using the indirect method requires a separate calculation of the CCA tax shield. What is the present value of the CCA tax shield? Buhler Industries is a farm implement manufacturer. Management is currently evaluating a proposal to build a plant that will manufacture lightweight tractors. Buhler plans to use a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incomplete incremental free cash flow projections (in millions of dollars): Year 0 Free Cash Flow ($000,000s) Revenues - Manufacturing expenses (other than depreciation) - Marketing expenses - CCA = EBIT - Taxes (35%) - Unlevered net income + CCA Years 1-9 Year 10 108.00 108.00 - 31.00 - 31.00 - 8.00 - 8.00 ? ? ? ? - ? ? = ? ? ? ? Using the indirect method requires a separate calculation of the CCA tax shield. What is the present value of the CCA tax shield
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