Incremental cash flow
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Nickel Industries is considering the purchase of a new machine that will cost $178,000, plus an additional $12,000 to ship and install. The new machine will have a 5 year useful life and will be depreciated using the straight line method. The machine is expected to generate new sales of $85,000 per year and is expected to increase operating costs by $10,000 annually. Nickel's income tax rate is 40%. What is the projected incremental cash flow of the machine or year 1?
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Solution Summary
The solution explains how to calculate the incremental cash flow for year 1.
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Incremental cash flow in year 1 = Net Income + Depreciation
Net Income is ...
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