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Intro BKM Industries spent $ 1 0 , 0 0 0 on a feasibility study to expand its production capacity. The company decided to go

Intro
BKM Industries spent $10,000 on a feasibility study to expand its production
capacity. The company decided to go ahead with the expansion: It will need to
buy a new machine for $53,000 and spend $8,000 on installing it. The machine
will be depreciated linearly to zero over a 5-year period and it will have no
salvage value.
The machine will create $87,000 in incremental revenues per year and $60,900 in
incremental costs per year. The company's marginal tax rate is 34%.
Part 1
What is the incremental incremental cash flow associated with the expansion in
year 0(initial investment)?
Part 2
What is the incremental incremental cash flow associated with the expansion in
year 1?
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