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Please show the Incremental Free Cash flow from year 1 to year 9 (rounded to two decimals) Thank you ! Mersey Chemicals manufactures polypropylene that
Please show the Incremental Free Cash flow from year 1 to year 9 (rounded to two decimals) Thank you !
Mersey Chemicals manufactures polypropylene that it ships to its customers via tank car. Currently it plans to add two additional tank cars to its fleet four years from now. However, a proposed plant expansion will require Mersey's transport division to add these two additional tank cars in 2 years' time rather than in 4 years. The current cost of a tank car is $2.1 million, and this cost is expected to remain constant. Also, while tank cars will last indefinitely, they will be depreciated straight-line over a five-year life for tax purposes. Suppose Mersey's tax rate is 35%. When evaluating the proposed expansion, what incremental free cash flows should be included to account for the need to accelerate the purchase of the tank carsStep by Step Solution
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