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5. Your company is planning to build a new motor cycle plant. The initial outlay for the project and subsequent sales and costs forecasts are

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5. Your company is planning to build a new motor cycle plant. The initial outlay for the project and subsequent sales and costs forecasts are given below. If the corporate tax rate is 30% and the opportunity cost of capital of your company is 12%, is the new project worth taking on? Year 0 Years 1-9 Investment -23million Sales 30million Variable costs 15million Fixed costs 11million Depreciation 4million (12.5 marks)

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