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A firm is considering a long-term investment that will cost $1,000 and is expected to produce net operating cash flows of $800 per year for
A firm is considering a long-term investment that will cost $1,000 and is expected to produce net operating cash flows of $800 per year for three years. The firm has a target capital structure of 25% debt and 75% equity, and the after-tax cost of long-term financing is 12% for debt and 16% for equity. The net present value of the proposed investment is:
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