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Morgan Corp. is studying the incremental cash flows of a pending replacement investment. In Year 1 , the new investment will increase cash revenues by

Morgan Corp. is studying the incremental cash flows of a pending replacement investment. In Year 1, the new investment will increase cash revenues by $40,000 per year and reduce cash labor expenses by $20,000. The added MACRS depreciation expense is $15,000 and Morgan Corp. has a 40% tax rate. What is the incremental after-tax cash flow for Year 1?

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