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 line's book value is $445,000, and Fleming's management feels it could be sold at this time for $350,000. A new, increased capacity line can be purchased for $ 2,575,000 and will require and increase in NWC of $55,000. Delivery and installation of the new line are expected to cost $50,000 and 215,000 respectively. Assuming Fleming's marginal tax rate is 35 %, calculate the net investment for the new line.
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 line's book value is $445,000, and Fleming's management feels it could be sold at this time for $350,000. A new, increased capacity line can be purchased for $ 2,575,000 and will require and increase in NWC of $55,000. Delivery and installation of the new line are expected to cost $50,000 and 215,000 respectively. Assuming Fleming's marginal tax rate is 35 %, calculate the net investment for the new line.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text: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 line's book value is $445,000, and Fleming's
management feels it could be sold at this time for $350,000. A new, increased capacity line can be purchased for $
2,575,000 and will require and increase in NWC of $55,000. Delivery and installation of the new line are expected to
cost $50,000 and 215,000 respectively. Assuming Fleming's marginal tax rate is 35 %, calculate the net investment for
the new line.
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