ABC Pty Ltd is evaluating a new business, and estimated that the capital expenditure is $20,000 at time zero, the projected sales and net working capital (NWC) are:

6. (50% ) ABC Pty It'd is evaluating a new business , and estimated that the capital expenditure is $20, 000 at time zero , the projected sales and net working capital ( NWC ) are :" Year Sales NWC O O 400 1 5. 0.00 500 2 6. 0.00 500 9.000 700 10. 0.00 700 10. 0.00 700 6 10.000 O Variable costs are 60%/ of sales , and fixed cost are negligible . The $20, 000 capital expenditure will be depreciated on a straight - line basis to zero over 5 years . The salvage value is $10, 000 in year 6 . The required rate of return is 10% and the tax rate is 27. 5%. Should ABC invest in the new business