Problem 9 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 $71,000 in incremental revenues per year and $49,700 in incremental costs per year. The company's marginal tax rate is 34%. Part 1 I' Attempt1/20for10pts. What is the incremental free cash flow associated with the expansion in year 0 nitial investment)? 0+ decima Part 2 I' Attempt1/20for10pts. What is the incremental free cash flow associated with the expansion in year 1? 0+ decima You're evaluating a new electron microscope for the QA (quality assurance) unit. The microscope will cost $21,000 to buy and another $2,000 to install, and will be sold for $1,800 after 3 years. It falls into the 3-year MACRS class, with depreciation rates as follows: Year 2 3 Depreciation rate 33% 45% 15% 7% The microscope will require an inventory of spare parts worth $5,000. The equipment will not increase revenue, but will save the company $10,000 in labor costs each year. Your company's marginal tax rate (federal plus state) is 34% and the appropriate cost of capital for this project is 9%. Part 1 7 8 Attempt 1/20 for 10 pts. What is the initial (year-0) free cash flow from the project? Choose the right sign. 0+ decima Submit Part 2 7 8 | Attempt 1/20 for 10 pts. What is the free cash flow in year 1? 0+ decima Submit Part 3 8 | Attempt 1/20 for 10 pts. What is the free cash flow in year 2? 0+ decima Submit Part 4 7 8 Attempt 1/20 for 10 pts. What is the after-tax salvage value at the end of year 3? 0+ decima Submit Part 5 7 8 | Attempt 1/20 for 10 pts. What is the free cash flow in year 3? 0+ decima Submit Part 6 7 8 | Attempt 1/20 for 10 pts. What is the NPV of this project? 0+ decima Submit