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Consider a two-year project with estimated after-tax operating income equal to $100 at t=1 and $120 at t=2. The working capital requirements are $20 at
Consider a two-year project with estimated after-tax operating income equal to $100 at t=1 and $120 at t=2. The working capital requirements are $20 at t=1 and $24 at t=2. The initial investment at t=0 is $80 and this investment depreciates straight-line to a salvage value of $0 at t=2. Assume you can recoup your entire working capital at the end of t=2. What are the after-tax cash flows at t=0, t=1, and t=2?
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