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Cameron Industries is purchasing a new chemical vapor depositor in order to make silicon chips. It will cost $ 5 , 0 0 0 ,

Cameron Industries is purchasing a new chemical vapor depositor
in order to make silicon chips. It will
cost$5,000,000to buy the machine
and$15,000to 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$4,500,000peryear, starting at the end
of the firstyear, with associated costs of$1 million
for each of those years. The machine is expected to have a working
life offiveyears and will be depreciated over
thosefiveyears. The marginal tax rate is40%.
What are the incremental free cash flows associated with the new
machine in year0?

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