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Drexel is contemplating buying a new machine for $100,000 with a 5 year life and no salvage value. With the new machine Drexel will have

Drexel is contemplating buying a new machine for $100,000 with a 5 year life and no salvage value. With the new machine Drexel will have additional revenues of $50,000 and additional operating expenses (not including new depreciation expense) of $10,000 in year 1. Calculate the free cash flow for year 1 assuming no change in working capital and straight line depreciation. Use a 25% tax rate.

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$30,000

$15,000

$35,000

$40,000

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