Question
Quality Printing is installing a new printer for a total cost of $250,000, which will be depreciated using straight-line over four years. The expected to
Quality Printing is installing a new printer for a total cost of $250,000, which will be depreciated using straight-line over four years. The expected to boost sales by $190,000 this year (year 1) and $370,000 for each of the following three years. Costs of good sold for this new printer are 40% of sales. Selling, General & Administrative costs associated with the new printer are projected to be $12,000 next year and then $18,000 for each of the following three years with the new wash. Net working capital requirements would increase $8,000 during the first year and increase by $10,000 for each of years 2 and 3. If the marginal tax rate is 35%, what are the incremental free cash flows for year 0, 1 and year 4?
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