Buckingham Packaging is considering expanding its production capacity by purchasing a new machine, the XC750. The cost of the XC-750 is $3.00 million. Unfortunately, installing this machine will take several months and will partially disrupt production. The firm has just completed a $50,000 feasibility study to analyze the decision to buy the XC-750, resulting in the following estimates: Marketing: Once the XC-750 is operating next year, the extra capacity is expected to generate $12.0 million per year in additional sales, which will continue for the 10 -year life of the machine. Operations: The disruption caused by the installation will decrease sales by $5 million this year (year 0 ). Once the machine is operating next year, the cost of goods for the XC-750 is expected to be 70% of their sale price. The increased production will require additional inventory on hand of $1.5 million, to be added in year 0 and depleted Human Resources: The expansion will require additional sales and administrative personnel at a cost of $2 million per year. Accounting: The XC750 hrs a CCA rate of 30% and no salvage value is expected. The firm expects receivables from the new sales to be 12% of revenues and pas the cost of goods sold. Buckingham's marginal corporate tax rate is 28%. a. Determine the incremental earnings (using CCA) from the purchase of the XC750. b. Datermine the free cash flow lincludina all CCA tax shield effects) from the nurchase of the XC- 750 for the first 10 vears. (Hint: include the imnact in vear 11 ) a. Determine the incremental earnings (using CCA) from the purchase of the XC750 for years 0 to 5 : The incremental eamings (including CCA ) for year 0 is $ (Round to the nearest dollar.) The incremental earnings (including CCA ) for year 1 is $ (Round to the nearest dollar.) The incremental eamings (including CCA) for year 2 is $ - (Round to the nearest dollar.) The incremental eamings (including CCA ) for year 3 is $ - (Round to the nearest dollar.) The incremental earnings (including CCA) for year 4 is \$ (Round to the nearest dollar.) The incremental earnings (including CCA) for year 5 is $ (Round to the nearest dollar.) Determine the incremental earnings (using CCA) from the purchase of the XC-750 for years 6 to 10 : The incremental earnings (including CCA) for year 6 is $ (Round to the nearest dollar.) The incremental earnings (including CCA) for year 7 is $. (Round to the nearest dollar.) Buckingham Packaging is considering expanding its production capacity by purchasing a new machine, the XC750. The cost of the XC-750 is $3.00 million. Unfortunately, installing this machine will take several months and will partially disrupt production. The firm has just completed a $50,000 feasibility study to analyze the decision to buy the XC-750, resulting in the following estimates: Marketing: Once the XC-750 is operating next year, the extra capacity is expected to generate $12.0 million per year in additional sales, which will continue for the 10 -year life of the machine. Operations: The disruption caused by the installation will decrease sales by $5 million this year (year 0 ). Once the machine is operating next year, the cost of goods for the XC-750 is expected to be 70% of their sale price. The increased production will require additional inventory on hand of $1.5 million, to be added in year 0 and depleted Human Resources: The expansion will require additional sales and administrative personnel at a cost of $2 million per year. Accounting: The XC750 hrs a CCA rate of 30% and no salvage value is expected. The firm expects receivables from the new sales to be 12% of revenues and pas the cost of goods sold. Buckingham's marginal corporate tax rate is 28%. a. Determine the incremental earnings (using CCA) from the purchase of the XC750. b. Datermine the free cash flow lincludina all CCA tax shield effects) from the nurchase of the XC- 750 for the first 10 vears. (Hint: include the imnact in vear 11 ) a. Determine the incremental earnings (using CCA) from the purchase of the XC750 for years 0 to 5 : The incremental eamings (including CCA ) for year 0 is $ (Round to the nearest dollar.) The incremental earnings (including CCA ) for year 1 is $ (Round to the nearest dollar.) The incremental eamings (including CCA) for year 2 is $ - (Round to the nearest dollar.) The incremental eamings (including CCA ) for year 3 is $ - (Round to the nearest dollar.) The incremental earnings (including CCA) for year 4 is \$ (Round to the nearest dollar.) The incremental earnings (including CCA) for year 5 is $ (Round to the nearest dollar.) Determine the incremental earnings (using CCA) from the purchase of the XC-750 for years 6 to 10 : The incremental earnings (including CCA) for year 6 is $ (Round to the nearest dollar.) The incremental earnings (including CCA) for year 7 is $. (Round to the nearest dollar.)