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2. Grey's Anatomy, Ltd., is contemplating opening a new retail outlet in a suburban shopping mall. Projections for an initial 10-year period for the potential

2. Grey's Anatomy, Ltd., is contemplating opening a new retail outlet in a suburban shopping mall. Projections for an initial 10-year period for the potential outlet are: Sales revenue: $2,000,000 Total costs: Advertising $500,000 Cost of goods sold 750,000 Wages and salaries 350,000 Rent 75,000 Depreciation 25,000 Utilities 75,000 Miscellaneous 25,000 Total 1,800,000 Projected Net profit before tax $ 200,000 A. Calculate the NPV for the proposed outlet assuming that an initial investment of $750,000 is required and the cost of capital is k=20%. B. Given the proposed outlet's projected net profit before tax, calculate the maximum initial investment that could be justified when k=20%.

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