Solve by AI. Question: Question: Question 2: Did Frank Greystock get all the relevant incremental cashflows? Why or why not? Diamond Chemical PLC - Meresyside Project Greystock's DCF Analysis of the Merseyside Project Assumptions Annual Output 250000 Output Gain/Original Output 7% Price/Tone (pounds sterling) 541 Inflation rate (price and costs) 0% Gross Margin (ex Depreciation) 13% Old Gross Margin 12% Tax Rate 30% Investement Outlay (million) 9% Energry savings/sales 1% Discount Rate 10% Depreciable Life (years) 15 Overhead/Investment 3.5% Salvage value 0 WIP invenotry/Cost of Goods 3% Months Downtime, Constructions 1.5 After-tax scrap proceeds 0 preliminary engineering costs 0.5 Year Now 2001 2002 2003 2004 1- Estimate of Incremental Gross Profit New output (tons) 267500 267500 267500 267500 Lost output - Construction -33438 New Sales (millions) 126.63 144.72 144.72 144.72 New Gross Margin 13.8% 13.8% 13.8% 13.8% New Gross Profit 17.41 19.9 19.9 19.9 Old output 250000 250000 250000 250000 Old sales 135.25 135.25 135.25 135.25 Old gross profit 15.55 15.55 15.55 15.55 incremental gross profit 1.86 4.34 4.34 4.34 2- Estimate of Incremental Depcreciation New Depcreciation 1.2 1.04 0.9 0.78 3- Overheard 0.32 0.32 0.32 0.32 4-Prelim Engineering Cost 0.5 5-PreTax Incremental Profits -0.16 2.99 3.13 3.25 6-Tax Expense