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:

HR-Related Processes

Concerns the range of procedures and tasks handled by a Human Resources department, including recruitment, onboarding, performance management, and employee development.

Succession Plans

Strategies developed by organizations to identify and develop future leaders to replace current ones when they leave or retire.

Work Hours

The scheduled hours during which an employee is expected to perform work duties.

Productivity Levels

Measures of output or efficiency indicating how effectively resources are utilized in producing goods or services.