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Alterra Inc. is considering a new three - year expansion project that requires an initial fixed asset investment of $ 1 . 2 million. The

Alterra Inc. is considering a new three-year expansion project that requires an initial fixed asset investment of $1.2 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. Alterra estimates that fixed asset will have a market value of $100,000 at the end of the project. The project is estimated to initially generate $1 million in annual sales increasing at a rate of 10% per year. Project costs are estimated to start at $430,000 increasing at a rate of 9% per year. The tax rate is 21 percent and the required return is 9.9 percent. Suppose the project requires an initial investment in net working capital of $250,000. What is the projects NPV?

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