A Company Buys Tracking Software for Its Warehouse Which, Along

question 20

Multiple Choice

A company buys tracking software for its warehouse which, along with the computer system and ancillaries to run it, will cost $1.6 million. This purchase will be deducted over five years. It is expected that the software will reduce inventory by $10.7 million at the end of the first year after it is installed, though there will be an annual cost of $120,000 per year to run the system. If the company's marginal tax rate is 40%, how will the purchase of this item change the company's free cash flows in the first year?

• A) $10.756 million
• B) $10.380 million
• C) $9.680 million
• D) $11.832 million

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Definitions:

Grievance Procedure

Formal process of filing a complaint and resolving a dispute within an organization

Final Step

The last action or stage in a process, necessary to complete or finalize the task at hand.

Arbitration

A method of alternative dispute resolution where a neutral third party makes a binding decision to resolve a dispute between parties.

Anger Management

The practice of recognizing signs of anger and learning coping strategies to deal with it effectively.