Daily Enterprises is purchasing a $10.5 million machine. It willcost $55,000 to transport and install the machine. Themachine has a depreciable life of five years using straight-linedepreciation and will have no salvage value. The machine willgenerate incremental revenues of $4.2 million per year alongwith incremental costs of $1.1 million per year. Daily's marginaltax rate is 35%. You are forecasting incremental free cashflows for Daily Enterprises. What are the incremental free cashflows associated with the new machine?The free cash flow for year 0 will be $nearest dollar.)(Round to the

Free cash flows are cash flows that are available for investors after firm have met all operating…

Answered: Daily Enterprises is purchasing a $10.5…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Daily Enterprises is purchasing a $10.33 million machine. It will cost $69,436.00 to transport and install the machine. The machine has a depreciable life of five years using the straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of $4.10 million per year along with incremental costs of $1.19 million per year. Daily's marginal tax rate is 37.00%. The cost of capital for the firm is 13.00%. (answer in dollars..so convert millions to dollars) The project will run for 5 years. What is the NPV of the project at the current cost of capital?

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