Question
Daily Enterprises is purchasing a $ 9.9 million machine. It will cost $ 50,000 to transport and install the machine. The machine has a depreciable
Daily Enterprises is purchasing a $ 9.9 million machine. It will cost $ 50,000 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 $ 4.4 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?
The free cash flow for year 0 will be
The free cash flow for years 1-5 will be
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