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A project requires an initial investment of $41 million in new equipment. The equipment is assumed to be depreciated to zero using the straight-line depreciation
A project requires an initial investment of $41 million in new equipment. The equipment is assumed to be depreciated to zero using the straight-line depreciation schedule over its 25 -year life. The pre-tax salvage value of the equipment at the end of the project is assumed to be $5 million. No additional net working capital or capital investment is required for this project. The appropriate discount rate is 9%. The average tax rate is 25% and the marginal tax rate is 21%. What is the operating cash flow (OCF) in each year at the financial break-even quantity? SHOW YOUR WORK BELOW TO GET CREDIT
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