Question 5 (15 marks) Montrose Ltd is analysing a potential investment in a new bottling line. The new line will generate incremental revenues of $75,000 per year for 7 years. The incremental operating costs of the bottling line are projected to be $25,000 per year. As a result of the new bottling line, the bottling division of Montrose will be allocated an additional $5000 per year of overhead costs from corporate headquarters. The initial capital expenditure to purchase the bottling equipment will be $98,000. Running the new line will increase the working capital requirements of the business by $5000 for the life of the project. This investment in working capital will be fully recovered when the bottling line is retired in 7 years. For tax purposes, the bottling equipment can be depreciated on a straight-line basis to zero over 7 years. Montrose expects that at the end of the 7 years the scrap value of the equipment will be $15,000. Montrose faces a corporate tax rate of 30%. Compute the net incremental cash flow for the bottling line for its final year (only the final year is required). Question 5 (15 marks) Montrose Ltd is analysing a potential investment in a new bottling line. The new line will generate incremental revenues of $75,000 per year for 7 years. The incremental operating costs of the bottling line are projected to be $25,000 per year. As a result of the new bottling line, the bottling division of Montrose will be allocated an additional $5000 per year of overhead costs from corporate headquarters. The initial capital expenditure to purchase the bottling equipment will be $98,000. Running the new line will increase the working capital requirements of the business by $5000 for the life of the project. This investment in working capital will be fully recovered when the bottling line is retired in 7 years. For tax purposes, the bottling equipment can be depreciated on a straight-line basis to zero over 7 years. Montrose expects that at the end of the 7 years the scrap value of the equipment will be $15,000. Montrose faces a corporate tax rate of 30%. Compute the net incremental cash flow for the bottling line for its final year (only the final year is required)