Question
In: Finance
Daily Enterprises is purchasing a$ 9.6million machine. It will cost $54,000 to transport and install the...
Daily Enterprises is purchasing a$ 9.6million machine. It will cost $54,000 to transport and install the machine. The machine has a depreciable life of five years using straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of$ 4.1 million per year along with incremental costs of $1.1 million per year. Daily's marginal tax rate is 35%. 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 $
(Round to the nearest dollar.)
Solutions
Expert Solution
Solution:
The Free cash flow for year 0 is
= Purchase cost of the machine + Transport and Installation costs
= $ 9,600,000 + $ 54,000 = $ 9,654,000
Free cash flow for year 0 = $ 9,654,000
The Incremental free cash flows for years 1 to 5 is = $ 2,625,780
Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.
jeff jeffy answered 1 year agoRelated Solutions
Daily Enterprises is purchasing a $10.3 million machine. It will cost $47,000 to transport and install...
Daily Enterprises is purchasing a $10.3 million machine. It will
cost $47,000 to transport and install the machine. The machine has
a depreciable life of five years and will have no salvage value.
The machine will generate incremental revenues of $4.2 million per
year along with incremental costs of $1.1 million per year. If
Daily's marginal tax rate is 35% what are the incremental
earnings (net income) associated with the new machine?
The annual incremental earnings is what ?...
Daily Enterprises is purchasing an $8 million machine. It will cost $100,000 to transport and install...
Daily Enterprises is purchasing an $8 million machine. It will
cost $100,000 to transport and install the machine. The machine has
a depreciable life of five years using the straight-line
depreciation and will have a market value of $1 million after the
5th year. The machine will generate incremental revenues of $5.0
million per year along with incremental costs of $2.4 million per
year. Daily’s marginal tax rate is 30%, and the firm will run the
project for 5 years....
Daily Enterprises is purchasing an $8 million machine. It will cost $100,000 to transport and install...
Daily Enterprises is purchasing an $8 million machine. It will
cost $100,000 to transport and install the machine. The machine has
a depreciable life of five years using the straight-line
depreciation and will have a market value of $1 million after the
5th year. The machine will generate incremental revenues of $4.75
million per year along with incremental costs of $2.4 million per
year. Daily’s marginal tax rate is 30%, and the firm will run the
project for 5 years....
Daily Enterprises is purchasing a $9.8 million machine. It will cost $51,000 to transport and install...
Daily Enterprises is purchasing a $9.8 million machine. It will
cost $51,000 to transport and install the machine. The machine has
a depreciable life of five years and will have no salvage value.
The machine will generate incremental revenues of $4.2 million per
year along with incremental costs of $1.2 million per year. If
Daily's marginal tax rate is 35%, what are the incremental
earnings (net income) associated with the new machine? The annual
incremental earnings are nothing.
SHOW THE...
Daily Enterprises is purchasing a $10 million machine. It will cost $50,000 to transport and install...
Daily Enterprises is purchasing a $10 million machine. It will
cost $50,000 to transport and install the machine. The machine will
be depreciated straight-line to zero over its five-year life. What
are the depreciation expenses associated with this machine per
year?
2,010,000
The machine in #11 will generate incremental revenues of $4
million per year along with incremental costs of $1.2 million per
year. If Daily’s marginal tax rate is 35%, what are the
incremental (after-tax) earnings associated with
the...
Daily Enterprises is purchasing a $10.45 million machine. It will cost $74,306.00 to transport and install...
Daily Enterprises is purchasing a $10.45 million machine. It
will cost $74,306.00 to transport and install the machine. The
machine has a depreciable life of five years using the
straight-line depreciation and will have no salvage value. The
machine will generate incremental revenues of $4.35 million per
year along with incremental costs of $1.39 million per year.
Daily’s marginal tax rate is 36.00%. The cost of capital for the
firm is 14.00%. (answer in dollars..so convert millions to dollars)
What...
Daily Enterprises is purchasing a $10.36 million machine. It will cost $66,800.00 to transport and install...
Daily Enterprises is purchasing a $10.36 million machine. It
will cost $66,800.00 to transport and install the machine. The
machine has a depreciable life of five years using the
straight-line depreciation and will have no salvage value. The
machine will generate incremental revenues of $4.60 million per
year along with incremental costs of $1.48 million per year.
Daily’s marginal tax rate is 36.00%.
The cost of capital for the firm is 12.00%.
(answer in dollars..so convert millions to dollars)
What...
Daily Enterprises is purchasing a $10.59 million machine. It will cost $63,833.00 to transport and install...
Daily Enterprises is purchasing a $10.59 million machine. It
will cost $63,833.00 to transport and install the machine. The
machine has a depreciable life of five years using the
straight-line depreciation and will have no salvage value. The
machine will generate incremental revenues of $4.20 million per
year along with incremental costs of $1.16 million per year.
Daily’s marginal tax rate is 37.00%. The cost of capital for the
firm is 10.00%. (answer in dollars..so convert millions to dollars)
The...
Daily Enterprises is purchasing a $10.38 million machine. It will cost $53,332.00 to transport and install...
Daily Enterprises is purchasing a $10.38 million machine. It
will cost $53,332.00 to transport and install the machine. The
machine has a depreciable life of five years using the
straight-line depreciation and will have no salvage value. The
machine will generate incremental revenues of $4.57 million per
year along with incremental costs of $1.17 million per year.
Daily’s marginal tax rate is 35.00%.
The cost of capital for the firm is 14.00%.
(answer in dollars..so convert millions to dollars)
What...
Daily Enterprises is purchasing a $9.9 million machine. It will cost $51,000 to transport and install...
Daily Enterprises is purchasing a $9.9 million machine. It will
cost $51,000 to transport and install the machine. The machine has
a depreciable life of five years and will have no salvage value.
The machine will generate incremental revenues of $ 3.9 million per
year along with incremental costs of $ 1.4 million per year. If?
Daily's marginal tax rate is 35 %?, what are the incremental
earnings? (net income) associated with the new? machine?
a. The annual incremental earnings...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- java programing project Implement a program that computes the Fibonacci of a specified number, the factorial...
- Team Case #3: Rural Utility Your consulting team has been brought in by the Board chairperson...
- I have a question pertaining to ruby on rails. I was wondering if there is a...
- For the past two years, the United States has imposed tariffs (tax) on imports from China....
- Module 2 Course Work 1. Read Pages 12-30. 2. Use the week 1 video's and this...
- 6. Solve the following recurrence relations t(n) = t(n-1) + 3 for n>1 t(1) = 0...
- In C programming using C11 library, how can we validate command line arguments? meaning for example...
ADVERTISEMENT