The Fleming Company, a food distributor, is considering replacing a filling line at its Oklahoma...
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The Fleming Company, a food distributor, is considering replacing a filling line at its Oklahoma City warehouse. The existing line was purchased several years ago for $3,600,000. The lines book value is $445,000, and Fleming management feels it could be sold at this time for $350,000. A new, increased capacity line can be purchased for $2,575,000. Delivery and installation of the new line are expected to cost an additional $265,000. Assuming Flemings marginal tax rate is 35%, calculate the net investment for the new line.
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