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Consider the following project for Hand Clapper, Incorporated. The company is considering a 4 - year project to manufacture clap - command garage door openers.

Consider the following project for Hand Clapper, Incorporated. The company is considering a 4-year project to manufacture clap-command garage door openers. This project requires an initial investment of $16.1 million that will be depreciated straight-line to zero over the project's life. An initial investment in net working capital of $1,010,000 is required to support spare parts inventory; this cost is fully recoverable whenever the project ends. The company believes it can generate $13.1 million in pretax revenues with $5.2 million in pretax operating costs. The tax rate is 21 percent and the discount rate is 15 percent. The market value of the equipment over the life of the project is as follows:
\table[[Year,\table[[Market Value (in],[millions)]]],[1,$14.10
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