Mersey chemicals manufactures polypropylene that it ships


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 1 ?years' time rather than in 4 years. The current cost of a tank car is $ 1.9 ?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 38%.

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?

Incremental FCF for year 0 is $____ million

Incremental FCF for year 1 is $____ million

Incremental FCF for year 2 is $____ million

Incremental FCF for year 3 is $____ million

Incremental FCF for year 4 is $____ million

Incremental FCF for year 5 is $____ million

Incremental FCF for year 6 is $____ million

Incremental FCF for year 7 is $____ million

Incremental FCF for year 8 is $____ million

Incremental FCF for year 9 is $____ million

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Financial Management: Mersey chemicals manufactures polypropylene that it ships
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