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Moonlight Company is considering automated baking equipment that costs $450,000 installed and would replace the present hand-made production method. The present equipment has zero book value and zero salvage value. The new equipment will not increase revenues but will reduce operating costs (excluding depreciation) from a current level of $600,000 to $350,000 per year. The depreciation of the new equipment will be $69,000 per year. Assume a marginal tax rate of 40 percent. What are the annual incremental net cash flows?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92414729

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