Incremental free cash flow associated with the expansion

Assignment Help Financial Management
Reference no: EM131575812

BKM Industries spent $10,000 on a feasibility study to expand its production capacity. The company decided to go ahead with the expansion: It will need to buy a new machine for $55,000 and spend $8,000 on installing it. The machine will be depreciated linearly to zero over a 5-year period and it will have no salvage value. The machine will create $76,000 in incremental revenues per year and $53,200 in incremental costs per year. The company's marginal tax rate is 34%.

What is the incremental free cash flow associated with the expansion in year 0?

What is the incremental free cash flow associated with the expansion in year 1?

Reference no: EM131575812

Questions Cloud

What is the tax revenue generated by the excise tax : Government officials in Kansas impose an excise tax of $0.30 per gallon of gasoline sold in the state. What is the tax revenue generated by the excise tax
What are the incremental earnings-what is the free cash flow : Creminy, Inc. estimates revenue of $70,000, costs of $35,000, and depreciation of $8,000 related to a new project. What are the incremental earnings?
What capital budgeting model is defined : What capital budgeting model is defined as the discount rate that makes NPV equal to zero?
What is the after-tax salvage value and current book value : What is the annual depreciation? What is the current book value? What is the after-tax salvage value (ATSV)?
Incremental free cash flow associated with the expansion : BKM Industries spent $10,000 on feasibility study to expand its production capacity. What is incremental free cash flow associated with the expansion in year 0.
Why are you looking at the company and the exchange : Why are you looking at the company and the exchange?
What is the risk-free rate : A put with the same terms sells for exist5. What is the risk-free rate?
What is your total profit or loss on your investment : what is your total profit or loss on your investment?
Investment outlay for machine for capital budgeting purposes : What is the initial investment outlay for the machine for capital budgeting purposes, that is, what is the Year 0 project cash flow?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd