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5. Consider a project to supply Detroit with 34,000 tons of machine screws annually for automobile production. You will need an initial $4,200,000 investment in

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5. Consider a project to supply Detroit with 34,000 tons of machine screws annually for automobile production. You will need an initial $4,200,000 investment in threading equipment to get the project started; the project will last for six years. The accounting department estimates that annual fixed costs will be $750,000 and that variable costs should be $215 per ton; accounting will depreciate the initial fixed asset investment straight-line to zero over the six-year project life. It also estimates a salvage value of $175,000 after dismantling costs. The marketing department estimates that the automakers will let the contract at a selling price of $310 per ton. The engineering department estimates you will need an initial net working capital investment of $250,000. You require 13 percent return and face a marginal tax rate of 38 percent on this project. What is the estimated OCF for this project? The NPV? Should you pursue this project

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