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6. (9 points) You are evaluating a 4-year investment opportunity in a new ice skating rink in the Bishop Arts neighborhood. The purchase price is
6. (9 points) You are evaluating a 4-year investment opportunity in a new ice skating rink in the Bishop Arts neighborhood. The purchase price is $8.4M. Shipping installation costs are $600K. The capitalized value of the asset (e. its beginning book value) will be depreciated down to an end-of-life book value of 0.5 M. The anticipated selling price of machine is IM. The ice rink is expected to provide cash sales of $14.1M per year, and will require cash expenditures of $9.3M each year. Also, at-o, working capital will rise by S420K; at termination, this change will all be reversed. The relevant marginal tax rate is 30%. The appropriate discount rate is 8% a). (4 points) Identify all relevant cash flows and then calculate cash flows for t-o,-1, 1-2, 1-3, and 4 b). (5 points) Calculate the NPV and profitability index of the project
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