Question: A company buys tracking software for its warehouse which, along with the computer system and ancillaries to run it, will cost $2.7 million. This purchase

A company buys tracking software for its warehouse which, along with the computer system and ancillaries to run it, will cost $2.7 million. This purchase will be deducted over five years. It is expected that the software will reduce inventory by $10.25 million at the end of the first year after it is installed, though there will be an annual cost of $430,000 per year to run the system. If the company's marginal tax rate is 35%, how will the purchase of this item change the company's free cash flows in the first year?

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