Billingham Packaging is considering expanding its production capacity by purchasing a new machine, the XC-750. The cost of the XC-750 is 52.81 million. Unfortunately, installing this machine will take several months and will partially disrupt production. The firm has just completed a $47.000 feasibility study to analyze the decision to buy the XC-750, resulting in the following estimates Marketing Once the XC-750 is operational next year, the extra capacity is expected to generate 510.05 milion per year in additional sales which will continue for the 10-yearfe of the machine Operations. The disruption caused by the installation will decrease sales by $4.97 million this year. As with Blingam's existing products, the cost of goods for the products produced by the XC-750 is expected to be 73% of their sale price. The increased production will also require incremed Inventory on hand of $1.09 million during the life of the project, including year 0 Human Resources: The expansion will require additional sales and administrative personnel at a cost of $2.08 million per year Accounting The XC-750 wl be depreciated via the straighine method over the 10-year lite of the machine. The firm expects receivables from the new sales to be 15% of revenues and payables to be % of the cost of goods sold. Bilingham's marginal corporate tax rate is 215 a. Determine the incremental earnings from the purchase of the XC-750 Determine the free cash flow from the purchase of the XC-750 e. If the appropriate cost of capital for the expansion is 9.7. compute the NPV of the purchase & While the expected new sales will be $10.06 million per year from the expansion estimates range from $7.95 million to $12.15 million. What is the NPV in the worst case in the best case? What is the beak-even lerned new All from the mansion What is the brakevan level for the cost of all a. Determine the incremental earnings from the purchase of the XC-750 Calculate the incremental earnings from the purchase of the XC-750 below (with vs without XC750X (Round to the nearest dollar) Incrementar Efects (with vs. Without XC750) Year 1.10 Bolesleves (4070.000 10.000.000 Cost of Good Gold 5. G and A Exp 2.000000 Depreciation 0 EDIT 5 Taxes at 21% Unlevered Net income 1. Bilingham could instead purchase the XC-900, which offers even greater capacity. The cost of the XC-900 is $3.91 milion. The extra capacity would not be useful in the first two years of operation, but w additional sales in years through 10 What level of additional Sales (above the $10.05 million expected for the XC-750) per year in those years would justily purchasing the larger machine? a. Determine the incremental earnings from the purchase of the XC-750. Calculate the incremental earnings from the purchase of the XC-750 below (with vs. without XC7750): (Round to the nearest dollar.) Incremental Effects (with vs without XC-750) Year 1.10 Sales Revenues $14.970,000) 10.050.000 Cost of Goods Sold S. G. and A Expenses (2.080,000) 0 0 Depreciation EBIT $ $ Tawes at 21% Unlevered Net Income $ Billingham Packaging is considering expanding its production capacity by purchasing a new machine, the XC-750. The cost of the XC-750 is 52.81 million. Unfortunately, installing this machine will take several months and will partially disrupt production. The firm has just completed a $47.000 feasibility study to analyze the decision to buy the XC-750, resulting in the following estimates Marketing Once the XC-750 is operational next year, the extra capacity is expected to generate 510.05 milion per year in additional sales which will continue for the 10-yearfe of the machine Operations. The disruption caused by the installation will decrease sales by $4.97 million this year. As with Blingam's existing products, the cost of goods for the products produced by the XC-750 is expected to be 73% of their sale price. The increased production will also require incremed Inventory on hand of $1.09 million during the life of the project, including year 0 Human Resources: The expansion will require additional sales and administrative personnel at a cost of $2.08 million per year Accounting The XC-750 wl be depreciated via the straighine method over the 10-year lite of the machine. The firm expects receivables from the new sales to be 15% of revenues and payables to be % of the cost of goods sold. Bilingham's marginal corporate tax rate is 215 a. Determine the incremental earnings from the purchase of the XC-750 Determine the free cash flow from the purchase of the XC-750 e. If the appropriate cost of capital for the expansion is 9.7. compute the NPV of the purchase & While the expected new sales will be $10.06 million per year from the expansion estimates range from $7.95 million to $12.15 million. What is the NPV in the worst case in the best case? What is the beak-even lerned new All from the mansion What is the brakevan level for the cost of all a. Determine the incremental earnings from the purchase of the XC-750 Calculate the incremental earnings from the purchase of the XC-750 below (with vs without XC750X (Round to the nearest dollar) Incrementar Efects (with vs. Without XC750) Year 1.10 Bolesleves (4070.000 10.000.000 Cost of Good Gold 5. G and A Exp 2.000000 Depreciation 0 EDIT 5 Taxes at 21% Unlevered Net income 1. Bilingham could instead purchase the XC-900, which offers even greater capacity. The cost of the XC-900 is $3.91 milion. The extra capacity would not be useful in the first two years of operation, but w additional sales in years through 10 What level of additional Sales (above the $10.05 million expected for the XC-750) per year in those years would justily purchasing the larger machine? a. Determine the incremental earnings from the purchase of the XC-750. Calculate the incremental earnings from the purchase of the XC-750 below (with vs. without XC7750): (Round to the nearest dollar.) Incremental Effects (with vs without XC-750) Year 1.10 Sales Revenues $14.970,000) 10.050.000 Cost of Goods Sold S. G. and A Expenses (2.080,000) 0 0 Depreciation EBIT $ $ Tawes at 21% Unlevered Net Income $