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1) Lee's Restaurant is planning to add a new line of noodles to the menu that will require the acquisition of new processing equipment. The

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1) Lee's Restaurant is planning to add a new line of noodles to the menu that will require the acquisition of new processing equipment. The equipment will cost $1,000,000, including installation and shipping. It will be depreciated straight-line to a zero value over the 10-year economic life of the project. Interest cost associated with financing the equipment purchase is estimated to be $40,000 annually. The expected savage value of the machine at the end of 10 years is $200,000. One year ago, a marketing survey was performed to gauge the likely success of the new project. The survey cost $25,000 and was paid last year If this new equipment is acquired, it will also allow the replacement of old equipment used for other food lines. This old equipment can be salvaged (SOLD) for $150,000 and has a book value of $200,000 The remaining depreciation on the old equipment is $40,000 annually for five more years. Additional new working capital of $85,000 will be needed immediately. When the project is terminated in 10 years, there no longer will be a need for this incremental working capital. Lee expects to sell $300,000 worth of this new pasta annually. The cost of producing and selling the pastais estimated to be $50,000annually (not including depreciation or interest expense). The marginal tax rate is 40% Part A) Compute the Net Investment Part B) Compute the net cash flow for the first year. Part c Compute the cash flow for the final year (year 10), including all terminal cash flows

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