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What is the incremental cash flow

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Adidas will release a new line of shoes created by Kanye. New equipment to manufacture the shoes will cost $8 million, which will be depreciated by straight-line depreciation over six years. In addition, there will be $3 million spent on promoting the new shoe line in year one. It is expected that the shoe line will bring in revenues of $10 million per year for five years with production and support costs of $3 million per year. If Adidas' marginal tax rate is 40%, what is the incremental cash flow in the second year of this project?

Reference no: EM132491288

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