The company spent $5,000 on a study that research the various models of equipment and...
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The company spent $5,000 on a study that research the various models of equipment and the company decided on the model that will have an installed cost of $360,000. The equipment will be depreciated straight line to zero over its five year life at the end of which parts of the equipment can be sold for $35,000, The equipment will save the firm $80,00 per year in pretax operating costs and the system requires an initial investment in net working capital of $14,500. Assume a tax rate is 35% and the relevant discount cate is 12%. what is the amount of OCF? and What is the annual deprecation ?
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