Duddy Kravitz owns the Saint Viateur Bagel store. His world famous bagels are hand rolled, boiled and
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Duddy Kravitz owns the Saint Viateur Bagel store. His world famous bagels are hand rolled, boiled and then baked in a woodburning oven. Uncle Benjy thinks that the wood oven should be replaced by a modern gas oven, which would reduce costs by $ per bagel. Duddy is considering Uncle Benjy's idea. Last week, Duddy hired a plumber for $ to explore the feasibility of running a gas pipe into the store. The current oven was purchased thirty years ago for $ It could be sold today for $ and will be worth $ in two years. A new oven costs $ today and could be sold for $ in two years. Assume that investment cash flows occur immediately, and that sales and production costs occur at the end of the year. The tax rate is What is the incremental initial cash flow for the project if he replaces the oven?
Related Book For
Managerial Accounting Creating Value in a Dynamic Business Environment
ISBN: 978-0078025662
10th edition
Authors: Ronald Hilton, David Platt
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