Intro

BKM Industries spent $$10,000$ on a feasibility study to expand its production capacity. The company decided to go ahead with the expansion: It will need to buy a new machine for $$60,000$ and spend $$8,000$ on installing it$.$ The machine will be depreciated linearly to zero over a $5-$year period and it will have no salvage value.

The machine will create $$83,000$ in incremental revenues per year and $$58,100$ in incremental costs per year. The company's marginal tax rate is $34\%.$

Part $1$

Attempt $\frac{2}{5}$ for $9$ pts$.$

What is the incremental cash flow from assets associated with the expansion in year $0($initial investment$)?$

Correct $$

Part $2$

Attempt $\frac{4}{5}$ for $7$ pts$.$

What is the incremental cash flow from assets associated with the expansion in year $1?$