question 10

Intro DeLuxe Furniture is thinking of buying a wood cutting machine for $180,000 that would save it $35,000 per year in production costs. The savings would be constant over the project's 3-year life. The machine is to be linearly depreciated to zero and will have no resale value after 3 years. The machine would require an additional $7,000 in net operating working capital. The appropriate cost of capital for this project is 10% and the company's tax rate is 35%. Year Year 1 Year 2 Year 3 0 0 35,000 35,000 35,000 0 60,000 60,000 60,000 0 -25,000 -25,000 -25,000 Cost savings Depreciation | EBIT Taxes (35%) Net income Depreciation NOPAT + DEP CAPEX ANOWC FCF | Attempt 1/3 for 10 pts. Part 1 What is the free cash flow in year o? Choose the right sign. 0+ decimals Submit | Attempt 1/3 for 10 pts. Part 2 What is the free cash flow in year 1? 0+ decimals Submit | Attempt 1/3 for 10 pts. Part 3 What is the free cash flow in year 2? 0+ decimals Submit Part 4 | Attempt 1/3 for 10 pts. What is the free cash flow in year 3? Hint: add the recovery of net operating working capital. 0+ decimals Submit Attempt 1/3 for 10 pts. Part 5 What is the NPV of this project? 0+ decimals Submit