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13. The Miners' Deli is considering the purchase of a new computer system for inventory control purposes. It is thought that better inventory management
13. The Miners' Deli is considering the purchase of a new computer system for inventory control purposes. It is thought that better inventory management will save the firm USD $20,000 a year in cash expenses (by reducing waste of perishable goods) although it is not expected to have any effect on revenues. It is also expected that the deli will be able to reduce its investment in inventory by USD $5,000 a year. No other net working capital accounts are expected to be affected. The system will cost USD $80,000 and will be depreciated using straight-line depreciation over 5 years for tax purposes. The firm pays taxes at a marginal rate of 25%. What are the annual incremental cash flows for this project in each of the first 5 years? $14,000 $24,000 $19,000 $5,000 None of the above answers is correct
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