What are the incremental free cash flows

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Reference no: EM132063944

Cameron Industries is purchasing a new chemical vapor depositor in order to make silicon chips. It will cost $ 6,000,000 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?

Reference no: EM132063944

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