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Eagle Corp. is looking at a new data processing system with an installed cost of $655,000. This cost will be depreciated straightline to zero over
Eagle Corp. is looking at a new data processing system with an installed cost of $655,000. This cost will be depreciated straightline to zero over the projects five-year life, at the end of which the system can be scrapped for $85,000. The system will save the firm $183,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $35,000. The tax rate is 22 percent.
What is the firm's Operational Cash Flow (OCF) associated with the project?
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