Athabasca Ag Is Purchasing 1,000 Grain Bins at a Cost

Multiple Choice

Athabasca Ag is purchasing 1,000 grain bins at a cost of $40,000 each.Each bin also has a $5,000 delivery and installation cost,and the bins have a capital cost allowance (CCA) rate of 25%.The bins are expected to increase gross profit by $12 million per year,starting at the end of the first year,with annual associated costs of $1.5 million per year.Athabasca has a marginal tax rate of 30%.What are the incremental free cash flows associated with the new bins in year 1?

A) -34.5 million
B) -$32.8 million
C) -$45 million
D) -$43.3 million
E) -$22.5 million