Question: ABC is starting a new project. It will require new equipment costing 3 3 . The project is expected to increase gross profits by 2

ABC is starting a new project. It will require new equipment costing 33. The project is expected to increase gross profits by 29 per year, starting at the end of the first year, with associated costs of 11 for each of those years. The machine is expected to have a working life of 5 years and will be depreciated over those 5 years. The marginal tax rate is 0.4. What are the incremental free cash flows associated with the new machine in year 2?

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