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7 . Revenues generated by the new product are forecast as follows. Year Revenue 1 $ 5 0 , 0 0 0 2 4 0
Revenues generated by the new product are forecast as follows.
Year Revenue
$
Expenses are expected to be of revenues, and working capital required at the beginning of each year is expected to be percent of revenues in the following year. The product requires an immediate investment of $ in plants and equipment.
a What is the initial investment in the product? Remember working capital.
b If the plant and equipment are depreciated over years to a salvage value of zero using straightline depreciation, and the firms tax rate is what are the project cash flow in each year?
c If the opportunity cost of capital is percent, what is project NPV
d What is the project IRR?
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