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1) You are considering a new project that has projected sales of $120,000 each year for five years. The project would have costs of $70,000
1) You are considering a new project that has projected sales of $120,000 each year for five years. The project would have costs of $70,000 and depreciation of $15,200.
a) Assuming a tax rate of 21%, calculate net income.
b) Calculate the Operating Cash Flow for the project.
c) Assuming the project has an initial cost of $100,000 and lasts five years, calculate the NPV of the project assuming a required rate of return of 10%.
d) Calculate the Internal Rate of Return on the project.
e) Should you accept or reject this project? Why?
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