World Global Corporation is considering the purchase of a new machine for SAR 336,000. The purchase of this machine will result in an increase in earnings before interest and taxes of SAR 32,000 per year. To operate this machine properly, workers would have to go throught a brief training session that would cost SAR 13,800 after taxes. It would cost SAR 5,900 to install the machine properly. Also, because the machine is extremely efficient, its purchase would necessitate an increase in inventory or SAR 22,800. This machine has an expected life of 10 years, after which it will have no salvage value. Finally, to purchase the new machine, it appears that the firm would have to borrow SAR 85,000 at 6 percent interest from a bank, resulting in additional interest payments of SAR 10,000 per year. Assume simplified straight-line decpreciation and that this machine is being depreciated down to zero, a 26 percent marginal tax rate, and a required rate of return of 7 percent.

Change in EBIT 32,000 Purchase Price 336,000 Training Session Fee 13,800 Installation Fee 5,900 Increase in Inventory 22,800 Life 10 Salvage Value 0 Interest payments 6,210 Depreciation 25,100 Tax Rate 26% Required rate of return 7%

What are the annual after-tax cash flows associated with this project for years 1 through 9? Differential Annual Free Cash Flows (Years 1-9) Cash Flow Change in EBIT Change in taxes Change in depreciation Project's Free Cash Flows ?