1. Cameron Industries is purchasing a new chemical vapor depositor in order to make silicon chips. It will cost $ 5 million to buy the machine and $15,000 to have it delivered and installed. Building a clean room in the plant for the machine will cost an additional $ 3 million.The machine is expected to have a working life of seven years. If straight-line depreciation is used, what are the yearly depreciation expenses in this case?
A. $716,429
B. $1,142,857
C. $714,286
D.$1,145,000
2. Cameron Industries is purchasing a new chemical vapor depositor in order to make silicon chips. It will cost $6,000,000 to buy the machine and $20,000 to have it delivered and installed. Building a clean room in the plant for the machine will cost an additional $3 million. The machine is expected to raise gross profits by $4,500,000 per year, starting at the end of the first year, with associated costs of $1 million for each of those years. The machine is expected to have a working life of six years and will be depreciated over those six years. The marginal tax rate is 40%. What are the incremental free cash flows associated with the new machine in year 2?
A. $2,496,667
B. $1,003,333
C. $2,501,333
D. $996,667