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(CH9 Problem 20) Adam, Inc. has come up with a new product. Adam paid $85,000 for a marketing survey to determine the viability of the
(CH9 Problem 20) Adam, Inc. has come up with a new product. Adam paid $85,000 for a marketing survey to determine the viability of the product. It is felt that the product will generate sales of $5,610,000 per year. The fixed costs associated with this will be $1,631,000 per year, and variable costs will amount to 24 percent of sales. The equipment necessary for the production of the product will cost $4,680,000 and will be depreciated in a straight-line manner for the 8 years of the product life. This is the only initial cost for the production. Adam has a tax rate of 25 percent and a required return of 16.6 percent. Calculate the NPV. Round your answer to the nearest penny
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