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A firm is considering expanding its current warehouse operations. The expansion will require new automation system at an initial investment cost of $127000. It will
A firm is considering expanding its current warehouse operations. The expansion will require
new automation system at an initial investment cost of $127000. It will be depreciated on a
straight-line method to a zero over the 4-year life of the project. At the end of project, the pretax
salvage value is estimated $63500. The project requires $7300 initially for net working capital
and it will be recouped at the end of the project. The projected operating cash flow is $101000
a year. What is the net present value of this project if the discount rate is 15 percent and the tax
rate is 35 percent?
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