Daily Enterprises is purchasing a

$ 9.7$9.7

million machine. It will cost

$ 45 comma 000$45,000

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

$ 4.3$4.3

million per year along with incremental costs of

$ 1.4$1.4

million per year. Daily's marginal tax rate is

35 %35%.

You are forecasting incremental free cash flows for Daily Enterprises. What are the incremental free cash flows associated with the new machine?

2.

Castle View Games would like to invest in a division to develop software for a soon-to-be-released video game console. To evaluate this decision, the firm first attempts to project the working capital needs for this operation. Its chief financial officer has developed the following estimates (in millions of dollars):(To copy the table below and use in Excel, click on icon in the upper right corner of table.)

		Year 1	Year 2	Year 3	Year 4	Year 5
1	Cash	44	1212	1616	1515	1616
2	Accounts receivable	2020	2525	2424	2424	2424
3	Inventory	66	88	1111	1212	1616
4	Accounts payable	1818	2121	2424	2929	3232

Assuming that Castle View currently does not have any working capital invested in this division, calculate the cash flows associated with changes in working capital for the first five years of this investment. (Note: Enter decreases as negative numbers.)