Author Question: Cameron Industries is purchasing a new chemical vapor depositor in order to make silicon chips. It ... (Read 59 times)

james0929 · **on:** Jul 9, 2019

Cameron Industries is purchasing a new chemical vapor depositor in order to make silicon chips. It will cost $6 million 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 million 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?
◦ $3,247,834
◦ $2,200,667
◦ $1,298,917
◦ $1,001,667

jaygar71 · **Reply #1 on:** Jul 9, 2019

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