What is incremental incremental cash flow associated

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Question

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 $50,000 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 $82,000 in incremental revenues per year and $57,400 in incremental costs per year. The company's marginal tax rate is 34%.

What is the incremental incremental cash flow associated with the expansion in year 0 (initial investment)?

Reference no: EM133650009

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