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Crunchy Cookie Corp. is replacing an entire baking line that was purchased for $420,000 eight years ago. This old equipment has been fully depreciated. The

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Crunchy Cookie Corp. is replacing an entire baking line that was purchased for $420,000 eight years ago. This old equipment has been fully depreciated. The new, higher capacity line being analyzed, will have an installed cost of $920,000 (at Yr 0) and can be depreciated as a 7-year MACRS asset. Due to the increased production capacity, Crunchy expects annual revenues to increase from $1,000,000/yr to $1,378,000/yr, and operating expenses to increase from $600,000/yr to $770,000/yr. Revenues and expenses are expected to remain at these higher levels for each year of the project life. The older machine being replaced will be sold for $93,000 at the time of the new project startup. The firm's marginal tax rate is 21%. What is the annual operating cash flow for year 2 of this project? (Only need to calculate year 2 annual cash flow.) If needed, the MACRS rates for the first three years, for a 7-year MACRS asset, are as follows: Yr 1 Rate: 14% Yr 2 Rate: 25% Yr 3 Rate: 17% (Round your answer to the nearest whole number -- no decimal places needed) Your

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