Question
Daily Enterprises is purchasing a $ 9.8$9.8 million machine. It will cost $48,000 to transport and install the machine. The machine has a depreciable life
Daily Enterprises is purchasing a $ 9.8$9.8 million machine. It will cost $48,000 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 $3.9 million per year along with incremental costs of $1.1 million per year. Daily's 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 for year 0 and years 1-5?
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