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Can I get an explanation on the following question? You are considering a 3-year project of which details are summarized below.Your required rate of return
Can I get an explanation on the following question?
You are considering a 3-year project of which details are summarized below.Your required rate of return for capital budgeting purposes is 20 percent.
- Annual sales = 30,000 units
- Unit sales price = $5.00
- Variable costs = $2.50 per unit
- Annual fixed costs = $18,000
- Initial capital investment = $72,000, depreciated to zero over 3 years
- Initial investment in working capital = $20,000, fully recovered at the end of the project
- The tax rate is 25%.
- What is the project's cash flow in year 3?
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