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Andronicus Corporation (AC) has the following jumbled information about an investment proposal: Revenues in each of years 14 = $30,000 Year 0 initial investment =
Andronicus Corporation (AC) has the following jumbled information about an investment proposal: Revenues in each of years 14 = $30,000 Year 0 initial investment = $50,000 Inventory level = $15,000 in year 1, $16,500 in year 2, and $10,000 in year 3 Production costs = $10,000 in each of years 14 Salvage value = $13,000 in year 4 Depreciation = 100% immediate bonus depreciation Tax rate = 21% There is an additional 6-month lag for all cash flows after year 0. For example, customers pay consistently with a 6-month lag, as AC does for production costs, taxes, etc. Draw up a set of cash flow forecasts as in Table 6.4. If the cost of capital is 8%, what is the projects NPV? Assume that, if the project generates losses, those losses can be used to offset profits for tax purposes elsewhere in the business. Note: Do not round your intermediate calculations. Round your final answer to the nearest whole dollar amount
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