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7. Suppose company XYZ can sell 50,000 units per year at a price of $4 per unit. It costs XYZ about $2.50 per unit to

7. Suppose company XYZ can sell 50,000 units per year at a price of $4 per unit. It costs XYZ about $2.50 per unit to make the product, and a new product such as this one typically has only a three-year life. XYZ requires a 20% on new products. Fixed costs for the project, including such things as rent on the production facility, will run $17,430 per year. Further, XYZ will need to invest a total of $90,000 in manufacturing equipment, this $90,000 will be 100 percent depreciated over the three-year life of the project. Finally, the project will require an initial $20,000 investment in net working capital, and the tax rate is 21 percent. Should XYZ accept the project?

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