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Assume the following: Year zero: Capital investment = $10 million and an increase of $700,000 in needed inventory; Years 1-3: OCF = $5,500,000 per year;

Assume the following: Year zero: Capital investment = $10 million and an increase of $700,000 in needed inventory; Years 1-3: OCF = $5,500,000 per year; Year 3: Full recovery of earlier increase in working capital and in addition, cash flow from salvage of $2 million. What are the incremental cash flows for years zero and 3, respectively?

A. -$10.7 and $7.5 million B. -$10.7 and $8.2 million C. $7.5 and $10.0 million D. -$10.0 and $8.2 million

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