Incremental free cash flows should be included to account

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Reference no: EM131532401

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 11 ?years' time rather than in 4 years. The current cost of a tank car is $2.1 ?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 36%.

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?

Round 2 decimal places

Incremental FCF for year 0 =

Incremental FCF for year 1=

For year 2=

For year 3=

Year 4=

Year 5=

Year 6=

Year 7=

Year 8=

Year 9=

Reference no: EM131532401

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