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Curtis is a financial analyst at an industrial firm. He has been asked to assess whether Project X is worth doing. He gathers the following
Curtis is a financial analyst at an industrial firm. He has been asked to assess whether Project X is worth doing. He gathers the following information: Purchase of capital equipment $500,000 Installation and shipping $22,000 Additional raw material inventory $5,000 Project X annual cash flow (pre-tax) $120,000 R&D costs (incurred two years ago) $82,000 Tax rate 40% Risk-adjusted discount rate 12% Project life 5 years Salvage value $50,000 CCA rate 20%. If the firm takes this project it will miss out on $50,000 of other opportunities since their sales force will be entirely occupied with Project X. Answer the following questions showing your qork. What is the initial cost of this project, CFO
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