Question
Daily Enterprises is purchasing a $10.3 million machine. It will cost $46,000 to transport and install the machine. The machine has a depreciable life of
Daily Enterprises is purchasing a $10.3 million machine. It will cost $46,000 to transport and install the machine. The machine has a depreciable life of five years using straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of $4.2 million per year along with incremental costs of $1.1 million per year. Dailys marginal tax rate is 35%. You are forecasting incremental free cash flows for Daily Enterprises. What are the incremental free cash flows associated with the new machine?
A. The free cash flow for year 0 will be? (Round to nearest dollar.)
B. The free cash flow for years 1-5 will be? (Round to the nearest dollar.)
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