f. Billingham could instead purchase the XC 900 which offers even greater capacity the cost of the XC 900 is 4.09 million dollars the extra capacity would not be use full in the 1st 2 years of operation but would allow for additional sales in years 3 through 10 what levels of additional sales per year in those years would justify purchasing the larger machine. for part A, calculate sales revenue, costs of good sold, S G and A expenses, depreciation, EBIT, taxes at 35%, and enlevered net income. for 0 and 1-10 years

gham Packaging is considering expanding its production capacity by purchasing a new machine, the XC-750 The cost of the XC 750 is $2.74 million. Unfortunately, installing this machine willtake several months and will Marketing Once the XC-750 is operational next year, the extra capacity is expected to generate $10 05 million per year in additional sales, which will continue for the 10-year life of the machine partially disrupt production. The firm has just completed a $48,000 feasibility study to analyze the decision to buy the XC-750, resulting in the following estimates he di pion caused b, he nstallatio wil de c ease sales by S4 95 mil on this year As with Ba ngham's ex sting pr ducts, the cost of goods fo the products produced by the XC75 s expected to be 73% f t e sale price. The increased production will also require increased inventory on hand of $1.19 milion during the life of the project, including year O . Human Resources: The expansion will require additional sales and administrative personnel at a cost of $2 03 million per year. will be depreciated via the straight ne method o er the 10 year life of the machine the incremental earnings from the purchase of the XC-750 he m expects receivables from the new sales to be 15% of revenues and payables to be 1 1% of the cost of goods b. Determine the free cash flow from the purchase of the XC-750 e cost of capital for the e e the NPV of the purchase d. While the expected new sales will be $10 05 milion per year from the expansion, estimates range from $8.10 million to $12.00 million What is the NPV in the worst case? In the best case? e. What is the break even level of new sales from the expansion? What is the breakeven level for the cost of goods sold? a. Determine the incremental earmings from the purchase of the XC-750 Calculate the incremental earnings from the purchase of the XC-750 below (with vs, without XC?750) (Round to the nearest dollar ) 1-10 344 PM d* 11/16/2018 ^ 0 Type here to search