Cameron Industries is purchasing a new chemical vapor depositor in order to make silicon chips. It will cost $7,000,000 to buy the machine and $20,000 to have it delivered and installed. Building a clean room in the plant for the machine will cost an additional $3 million. The machine is expected to raise gross profits by $4,500,000 per year, starting at the end of the first year, with associated costs of $1 million for each of those years. The machine is expected to have a working life of seven years and will be depreciated over those seven years. The marginal tax rate is 20%. What are the incremental free cash flows associated with the new machine in year 0? A) -$10,020,000 B) -$7,000,000 C) $1,002,857 D) -$9018000 Revenues Cost of Goods Sold Gross Profit Selling, General and Admin Depreciation EBIT Income tax (20%) Incremental Earnings Capital Purchases Changes to NWC A) -$191,056 B) $221,223 C) $201,112 Year 0 D) -$181,001 -280,000 Year 1 100,000 -50,000 50,000 -6300 Year 2 450,000 225,000 225,000 Year 3 450,000 225,000 225,000 170,000 6300 71,000 92,700 -29,540 -29,540 -18,540 118,160 118,160 74,160 -5,000 6300 6300 -71,000 71,000 71,000 -27,300 147,700 147,700 5460 -21,840 -5,000 A garage is installing a new "bubble-wash" car wash. It will promote the car wash as a fun activity for the family, and it is expected that the novelty of this approach will boost sales in the medium term. If the cost of capital is 8%, what is the net present value (NPV) of this project? -5,000 Year 4 340,000 170,000 -5,000