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roduction. The firm has just completed a $50,000 feasibility study to analyze the decision to buy the XC-750, resulting in the following estimates: larketing: Once
roduction. The firm has just completed a $50,000 feasibility study to analyze the decision to buy the XC-750, resulting in the following estimates: larketing: Once the XC-750 is operating next year, the extra capacity is expected to generate $10.0 million per year in additional sales, which will continue for the 10 -year life of the machine. he increased production will require additional inventory on hand of $1.0 million, to be added in year 0 and depleted in year 10 . Iuman Resources: The expansion will require additional sales and administrative personnel at a cost of $2 million per year. orporate tax rate is 35%. Determine the incremental earnings (using CCA ) from the purchase of the XC-750. . Determine the free cash flow (including all CCA tax shield effects) from the purchase of the XC-750 for the first 10 years. (Hint: include the impact in year 11.) Determine the free cash flow from the purchase of the XC- 750 for years 6 to 9 : The free cash flow for year 6 is $. (Round to the nearest dollar.) The free cash flow for year 7 is $. (Round to the nearest dollar.) The free cash flow for year 8 is $. (Round to the nearest dollar.) The free cash flow for year 9 is $. (Round to the nearest dollar.) Determine the free cash flow from the purchase of the XC-750 for year 10: The free cash flow for year 10 is $. (Round to the nearest dollar.) Determine the free cash flow from the purchase of the XC750 for year 11 . The free cash flow for year 11 is $. (Round to the nearest dollar.)
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