Cameron Industries is purchasing a new chemical vapor depositor in order to make silicon chips. It will cost $5,000,000 to buy the machine and $10,000 to have it delivered and installed
Building a clean room in the plant for the machine will cost an additional $3 million. The machine is expected to raise gross profits by $4,500,000 per year, starting at the end of the first year, with associated costs of $1 million for each of those years. The machine is expected to have a working life of six years and will be depreciated over those six years. The marginal tax rate is 40%. What are the incremental free cash flows associated with the new machine in year 2?
A) $835,000
B) $2,665,000
C) $2,434,000
D) $831,667
Answer: C
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Mr. Ho talked with Mr. Tarr, who ran a business called Roscali Roofing. Mr. Ho agreed to pay Tarr $250 for the repair of his roof. In time, Gene Fix, Tarr's employee, came to Mr. Ho's and worked on the roof. Fix used the wrong material in the repairs, which made all his effort worthless, and during the next rain the roof leaked as before. Which of the following is true?
A) Ho could successfully sue only Tarr for breach of contract. B) Ho could successfully sue only Fix or Tarr for breach of contract, whichever he chooses, but not both. C) Ho could successfully sue Fix and Tarr for breach of contract since they were both connected with the job. D) If Tarr doesn't pay Fix, Fix could sue Ho directly for his pay because he worked on Ho's roof. E) Ho could only sue Tarr because he is the one who did a poor job of the roof.
Increasing pressure from customers led Circuit Power and Light to add solar energy as a choice for how their electricity is generated. This is an example of which business reason for adopting environmentally sustainable products?
A. Competitive strategy B. Cost reduction C. Stakeholder influence D. Regulatory compliance