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ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $ 8
ABC Corporation has hired you to evaluate a new FOUR year project for
the firm. The project will require the purchase of a $ work cell.
Further, it will cost the firm $ to get the work cell delivered and
installed. The work cell will be straightline depreciated to zero with a
year useful life. The project will require new employees to be trained at a
cost of $ The project will also use a piece of equipment the
firm already owns. The equipment has been fully depreciated, but has a
market value of $ Finally, the firm will invest $ in net
working capital to ensure the project has sufficient resources to be
successful.
The project will generate annual sales of $ with expenses
estimated at of sales. Net working capital will be held constant
throughout the project. The tax rate is
The work cell is estimated to have a market value of $ at the
end of the fourth year. The firm expects to reclaim of the final
NWC position.
The cost of capital is
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