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1) Mike Steel Company is planning to purchase a new mixer/dubber for $700,000. The machime would replace an older mixer. The older machine to be
1) Mike Steel Company is planning to purchase a new mixer/dubber for $700,000. The machime would replace an older mixer. The older machine to be replaced has a zero book and salvage value. The new mixer/dubber will not increase sales revenue. However, it will lower operating costs from a current level of $650,000 to $400,000 per year. The depreciation of the new equipment will be $60,000 per year. What are the annual incremental net cash flows? Assume a marginal tax rate of 30 percent.
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