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American Foods ( AF ) wants to increase its operating efficiency by installing a new inventory management system. The system requires an investment in equipment

American Foods (AF) wants to increase its operating efficiency by installing a new inventory management system. The system requires an investment in equipment of $19,616 today. The equipment will be depreciated on a straight line basis to a value of zero over a five year life. The first depreciation charge will be recognized one year from now (at Year 1). The system will allow AF to reduce its inventory levels one year from now by $2,953. The system is expected to increase AF's revenue by $27,150 each year. Annual pre-tax expense of $12,716 is required to run the system. If the company's tax rate is 33%, what is the incremental free cash flow for the system one year from now (at Year 1)?

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