Question: You are forecasting incremental free cash flows for your project that involves purchasing a $100,000 machine. The machine wil be depreciated to zero book value

You are forecasting incremental free cash flows for your project that involves purchasing a $100,000 machine. The machine wil be depreciated to zero book value over five years using straight-line depreciation. You estimate that the machine can be sold at the end of the projcet for $40,000. The machine will generate incremental revenues of $50,000 per year along with incremental costs of $30,000 per year. Your company's marginal tax rate is 20%. What is the incremental free cash flow associated with the new machine in year 5?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!