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After spending $9,$90 on elent-development, you have just been offeced a big producton contrac by a new client. The contract will add 5206,000 to your

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After spending $9,$90 on elent-development, you have just been offeced a big producton contrac by a new client. The contract will add 5206,000 to your revenues for each of the nent five yearn and It will cost you $97,000 per year to make the addbonal product. You wil have to use some existing equipment and buy new equigment as wol. The existing equipment is full depreciated, but could will be worthless at the end of the project. Your curtent production manager earns $50,000 per year. Since she is busy wh ongoing projects, you are planning to hire an assistant at $44, 000 per year to helo with the expansion. You will have to immediately increase your inventory from $20,000 to $30.000. it will retum to $20,000 at the end of the profect. Your company/s tax rate is 21% and your discounk rate is 15.4%. What is the NPV of the contraci? (Note Assume that the equipment is put into use in yoar 1.) Calculate the free cash fows below for years 0 through 2 . (Round to the nearest dollar.)

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