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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 of $16,984
American Foods (AF) wants to increase its operating efficiency by installing a new inventory management system. The system requires an investment in equipment of $16,984 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 $2,028. The system is expected to increase AF's revenue by $25,438 each year. Annual pre-tax expense of $12,757 is required to run the system. If the company's tax rate is 31%, what is the incremental free cash flow for the system one year from
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