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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 $5,090 and recommended purchasing the latest model from HiFlex of America. The equipment costs $73,339, and it will cost another $8,655 to modify it for special use by your firm. The equipment will be depreciated on a straight-line basis over 10 years with no salvage value. You expect the equipment will be sold after 4 years for $27,500. Use of the equipment will require an increase in your company's net working capital of $7,199, which will be recovered at the end of year 4. The use of the equipment will have no effect on revenues, but it is expected to save the firm $48,187 per year in before-tax cash operating costs. Your company's marginal tax rate is 32%. What is the operating free cash flow in the first year of the project, to the nearest dollar? Correct answer is 35,391

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