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A manufacturer of backpacks plans to introduce a new line. Equipment and production costs total $7,272,727. The company expects a cash flow of $20 per
A manufacturer of backpacks plans to introduce a new line. Equipment and production costs total $7,272,727. The company expects a cash flow of $20 per backpack. Sales are estimated at 100,000 in the first year, and are then expected to grow by 10% in each of the following 3 years. Should the company produce the backpacks if the required rate of return is 12%?
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