The incremental cash flow that the Krusty Krab will incur in year 1 if they elect to upgrade to the new grill is closest to:
A)6500
B)7800
C)10,800
D)11,500

Name: The incremental cash flow that the Krusty Krab will incur in year 1 if they elect to upgrade to the new grill is closest to: A)6500 B)7800 C)10,800 D)11,500
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Question

Quizplus · Accepted Answer

D)Incremental EBITDA = 50,000 - 35,000 = 15,000
Incremental Depreciation = 80,000/8 - 50,000/10 = 5000
Incremental cash flow = (15,000 - 5000)× (1 - .35)+ 5000 = 11,500

The Incremental Cash Flow That the Krusty Krab Will Incur