Question
Daily enterprise is purchasing a $10.2 million machine. It will cost $47,000 to transport and install the machine. The machine has a depreciation life of
Daily enterprise is purchasing a $10.2 million machine. It will cost $47,000 to transport and install the machine. The machine has a depreciation life of five years using straight line depreciation and will have no salvage value. The machine will generate incremental revenue of $3.9 million per year along with incremental costs of $1.1 million per year. Daily's marginal tax rat his 35%. You are forecasting incremental free cash flows for Daily Enterprises. What are the incremental free cash flows associated with the new machine? free cash flow for year 0? free cash flow for years 1-5?
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