What are the incremental free cash flows in the second year

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Reference no: EM131048262

Cathy Foods will release new range of candies which contain antioxidants. New equipment to manufacture the candy will cost 2 million, which will be depreciated by straight line depreciation over four years. In addition, there will be 5 million spent on promoting the new candy line. It is expected that the range of candies will bring in revenues of 4 million per year for four years with production and support costs of 1.5 million per year. If CathFood's marginal tax rate is 35%, what are the incremental free cash flows in the second year of this project?

Reference no: EM131048262

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