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You are analyzing the purchase of new equipment. Since you are not an expert on this type of equipment, you hire a consulting firm to
You are analyzing the purchase of new equipment. Since you are not an expert on this type of equipment, you hire a consulting firm to make recommendations. The consultant charged you $ and recommended purchasing the latest model from HiFlex of America. The equipment costs $ and it will cost another $ to modify it for special use by your firm. The equipment will be depreciated on a straightline basis over years with no salvage value. You expect the equipment will be sold after years for $ Use of the equipment will require an increase in your company's net working capital of $ which will be recovered at the end of year The use of the equipment will have no effect on revenues, but it is expected to save the firm $ per year in beforetax cash operating costs. Your company's marginal tax rate is What is the operating free cash flow in the first year of the project, to the nearest dollar? Correct answer is
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