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A manager proposes to launch a new product at a development cost of $14,000. The new product will generate expected after-tax cash flows of $1070
A manager proposes to launch a new product at a development cost of $14,000. The new product will generate expected after-tax cash flows of $1070 per year forever. However, it is predicted that 31% of the cash flows will come via cannabalization of existing product lines. If the discount rate is 5.2%, what is the NPV of the new product proposal? Give your answer to the nearest dollar.
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