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Down Under Boomerang, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.42 million. The fixed asset will
Down Under Boomerang, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.42 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which it will be worthless. The project is estimated to generate $1.09 million in annual sales, with costs of $475,000. The project requires an initial investment in net working capital of $250,000 and the fixed asset will have a market value of $230,000 at the end of the project. The intrest is 12%.
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