Problem:
An organization is considering replacing a machine that requires an initial investment of $5 million and will yield annual operating cash inflows of $300,000 for each of the next 10 years. Operating cash outlays will be $30,000 for each year. The machine will require an overhaul investment will require an additional cash outlay of $200,000 in year 5. The asset's liquidation value at the end of the year 10 is expected to be zero. There's straighline depreciated for both the life of machine and its overhaul. There's no change in inventory, accounts payable or receivables. Taxes are calculated at 30% and the cost of capital is %6%
What is the forecast for the relevant unlevered net income for the next 10 years?
what is the FCF for the life of the machine?