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Mersey Chemicals manufactures polypropylene that it ships to its customers via tank car. Currently it plans to add two additional tank cars to its fleet four years from now. ? However, a proposed plant expansion will require? Mersey's transport division to add these two additional tank cars in 3 years' time rather than in 4 years. The current cost of a tank car is $1.9 million, and this cost is expected to remain constant.? Also, while tank cars will last? indefinitely, they will be depreciated? straight-line over a? five-year life for tax purposes. Suppose? Mersey's tax rate is 40%. When evaluating the proposed? expansion, what incremental free cash flows should be included to account for the need to accelerate the purchase of the tank? cars?

a ) Incremental FCF for year 0 is $million. ? (Round to two decimal places and outflows as negative? values.)

b) Incremental FCF for year 1 is $million. ? (Round to two decimal places and outflows as negative? values.)

C) Incremental FCF for year 2 is $ million. ? (Round to two decimal places and outflows as negative? values.)

d) Incremental FCF for year 3 is $ million. ? (Round to two decimal places and outflows as negative? values.)

e) Incremental FCF for year 4 is $ million. ? (Round to two decimal places and outflows as negative? values.)

f) Incremental FCF for year 5 is $ million. ? (Round to two decimal places and outflows as negative? values.)

g) Incremental FCF for year 6 is $ million. ? (Round to two decimal places and outflows as negative? values.)

h) Incremental FCF for year 7 is $ million. ? (Round to two decimal places and outflows as negative? values.)

i) Incremental FCF for year 8 is $ million. ? (Round to two decimal places and outflows as negative? values.)

j) Incremental FCF for year 9 is $ million. ? (Round to two decimal places and outflows as negative? values.)

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92355635

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