Question: Please help me fill out the chart, I will Upvote Thanks! Billingham Packaging is considering expanding its production capacity by purchasing a new machine, the


Billingham Packaging is considering expanding its production capacity by purchasing a new machine, the XC-750. The cost of the XC-750 is $2.85 million. Unfortunately, installing this machine will take several months and will partially disrupt production. The firm has just completed a $48,000 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 $10.15 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 $5.03 million this year. As with Billingham's existing products, the cost of goods for the products produced by the XC-750 is expected to be 74% of their sale price. The increased production will also require increased inventory on hand of $1.18 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 $1.92 million per year. Accounting: The XC-750 will be depreciated via the straight-line method over the 10-year life of the machine. The firm expects receivables from the new sales to be 14% of revenues and payables to be 10% of the cost of goods sold. Billingham's marginal corporate tax rate is 35%. b. Determine the free cash flow from the purchase of the XC-750. Calculate the free cash flow from the purchase of the XC-750 below (with vs. without XC?750): (Note: the change in net working capital for year 0 is equal to the sum of the change in accounts receivable due to the decrease in sales, the change in inventory due to the increase in inventory starting in year 0, and the change in accounts payable due to the decrease in cost of goods sold.) (Round to the nearest dollar.) Incremental Effects Year 2.9 10 Unlevered Net Income Depreciation Capital Expenditures Change on Net Working Capital 10 O 10 2) S is S S 10 S S 60 S 1- CA MA M S S S SA 60 $ 10 change in inventory due to the increase in inventory starting in year 0, and the change in accounts payable due to the decrease in cost of goods sold.) (Round to the nearest dollar.) Incremental Effects Year 0 2-9 10 11 Unlevered Net Income Depreciation Capital Expenditures Change on Net Working Capital Free cash flow S S S CA S S SA SA 59 $ 69 P 5 $ S 09 S S 39 GA S S 50 $ S S 60
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