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What are the after-tax cash flows associated

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Johnsonville Sausage Company is a profitable,  tax-paying company.  Management is looking at a new bratwurst stuffing system with an installed cost of$300,000. This cost will be fully depreciated straight line over the five-year economic life of the system for tax purposes.  Despite full depreciation, the salvage value of the system will be $60,000 at the end of its economic life. The new stuffer will add the firm $100,000 per year in gross profit (revenue- cost of goods sold). The system requires an initial inventory investment  of$20,000 to operate, recoverable at the end of the project's life. The income tax rate is 40 percent for both ordinary and capital gains or losses.

a) What are the after-tax cash flows associated for each relevant period?

Reference no: EM132248367

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