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A company is evaluating an investment that has infinite life. The first years sales are expected to be $120 and the first year costs are
A company is evaluating an investment that has infinite life. The first years sales are expected to be $120 and the first year costs are projected to be $75. All sles and costs are before tax and the tax rate is 30%. Both sales and costs are projected to increase each year by inflation which is forecasted at 2.5%. The real required return is 10%. The project cost is $450. Should the company undertake the investment?
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