Question: Eagle Corp. is looking at a new data processing system with an installed cost of $655,000. This cost will be depreciated straightline to zero over

Eagle Corp. is looking at a new data processing system with an installed cost of $655,000. This cost will be depreciated straightline to zero over the projects five-year life, at the end of which the system can be scrapped for $85,000. The system will save the firm $183,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $35,000. The tax rate is 22 percent.

What is the total cash outflow at the beginning of the project?

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