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D Question 1 3.75 pts Superior Oil Company is evaluating a possible investment in a new pipeline. The investment will cost $25 million. $12 million
D Question 1 3.75 pts Superior Oil Company is evaluating a possible investment in a new pipeline. The investment will cost $25 million. $12 million of the cost is depreciable. The expected increase in EBDT in year 1 (based on the company making the investment) is $5 million. The company's tax rate is 35%. Assume the company uses the 5 year MACRS depreciation method (see below). Calculate the company's net cash flow for year 1 of the project. Five Year MACRS depreciation schedule. Yr1 .20; Yr2 .32; Yr3 .192; Yr4 .115; Yr5 .115; Yr6 .058 O $2,400,000 O $1,690,000 O $4,090,000 O $2,600,000
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