Calculate the net investment for the new line

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Reference no: EM131223940

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 $600,000.

The line's book value is $200,000, and Fleming management feels it could be sold at this time for $150,000. A new, increased capacity line can be purchased for $1,200,000. Delivery and installation of the new line are expected to cost an additional $100,000.

Assuming Fleming's marginal tax rate is 40%, calculate the net investment for the new line.

Reference no: EM131223940

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