Charly Inc. acquires a production line costing $11,000,000 on 1 Jan 2021. The production line...
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Charly Inc. acquires a production line costing $11,000,000 on 1 Jan 2021. The production line has an expected life of 10 years, at which point it is planned to be sold for a scrap value of $1,000,000. By how much will its Free Cash Flow to the Firm (FCFF) be increased or decreased in the year ended 31 December 2021 if the production line is depreciated on a reducing balance basis at a rate of 15% in that year, compared to being amortised on a straight line basis?
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