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Barry Buc Company is considering a project that would have a ten-year life and would require a $1,000,000 investment in equipment. At the end of
Barry Buc Company is considering a project that would have a ten-year life and would require a $1,000,000 investment in equipment. At the end of ten years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows (Ignore income taxes.): Sales $2,000,000 Variable expenses 1,400,000 Contribution margin 600,000 Fixed expenses: Fixed out-of-pocket cash expenses $300,000 Depreciation 100,000 400,000 Net operating income $200,000 Required: a. Compute the project's net present value. b. Compute the project's payback period
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