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1. A 10-year WiFi routers project requires $30 million in upfront investment (all in depreciable assets), $12 million of which is borrowed capital at an

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1. A 10-year WiFi routers project requires $30 million in upfront investment (all in depreciable assets), $12 million of which is borrowed capital at an interest rate of 6.20% per year. The expected router sales are 2,460,000 routers per year. The expected price per router is $80 and the variable cost is $48 per unit. The fixed costs excluding depreciation are expected to be $24 million per year for ten years. The upfront investment will be depreciated on a straight-line basis for the 10 -year life of the project to $2 million book value. The expected salvage value of the assets is $2.80 million. The tax rate is 25% and the RRR applicable to the project is 13%. a. Calculate the DOL, DFL, and DCL (Do not use the equations; do your own change in sales scenario as I did in the Excel handout)

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