Considering replacing existing machine

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Grind Co. is considering replacing an existing machine. The new machine is expected to reduce labor costs by $88,000 per year for 5 years. Depreciation on the new machine is $58,000 compared with $44,000 on the old machine. In addition, inventory will increase from $250,000 to $322,000 until the end of the project. The tax rate is 30%. What is the relevant cash flow in year 2.

Reference no: EM131357986

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