Daily Enterprises is purchasing a $10.4 million machine. It will cost $46,000 to transport and install the machine. The machine has a depreciable life of five years using straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of $4.4 million per year along with incremental costs of $1.5 million per year. Daily's marginal tax rate is 21%. You are forecasting incremental free cash flows for Daily Enterprises. What are the incremental free cash flows associated with the new machine? The free cash flow for year 0 will be $10,446,000. (Round to the nearest dollar.) The free cash flow for years 1-5 will be $ (Round to the nearest dollar.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 9P
Question
Daily Enterprises is purchasing a $10.4 million machine. It will cost $46,000 to transport and install the machine. The
machine has a depreciable life of five years using straight-line depreciation and will have no salvage value. The
machine will generate incremental revenues of $4.4 million per year along with incremental costs of $1.5 million per
year. Daily's marginal tax rate is 21%. You are forecasting incremental free cash flows for Daily Enterprises. What are
the incremental free cash flows associated with the new machine?
The free cash flow for year 0 will be $10,446,000. (Round to the nearest dollar.)
The free cash flow for years 1-5 will be $ (Round to the nearest dollar.)
Transcribed Image Text:Daily Enterprises is purchasing a $10.4 million machine. It will cost $46,000 to transport and install the machine. The machine has a depreciable life of five years using straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of $4.4 million per year along with incremental costs of $1.5 million per year. Daily's marginal tax rate is 21%. You are forecasting incremental free cash flows for Daily Enterprises. What are the incremental free cash flows associated with the new machine? The free cash flow for year 0 will be $10,446,000. (Round to the nearest dollar.) The free cash flow for years 1-5 will be $ (Round to the nearest dollar.)
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