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Andronicus Corporation has the following jumbled information about an investment proposal: Revenues in each of years 13 = $40,000 Year 0 initial investment = $60,000
Andronicus Corporation has the following jumbled information about an investment proposal:
- Revenues in each of years 13 = $40,000
- Year 0 initial investment = $60,000
- Inventory level = $20,000 in year 1, $22,500 in year 2, and $15,000 in year 3
- Production costs = $13,000 in each of years 13
- Salvage value = $14,000 in year 4
- Depreciation = 100% immediate bonus depreciation
- Tax rate = 21%
- Customers pay with a 6-month lag
Draw up a set of cash flow forecasts as in Table 6.4. If the cost of capital is 10%, what is the projects NPV? Assume that, if the project generates losses, those losses can be used to offset profits 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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