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Down Under Boomerang, Inc., is considering a new 6-year project that requires an initial investment in a fixed asset of $6.426 million. The fixed asset
Down Under Boomerang, Inc., is considering a new 6-year project that requires an initial investment in a fixed asset of $6.426 million. The fixed asset will be depreciated straight- line to zero over its 6-year life. After Year O, the project is expected to generate $5,712,000 in annual sales per year, with operating costs of $2,284,800 per year. The tax rate is 33 percent and the appropriate discount rate is 17 percent. The project requires an increase in net working capital of $714,000 in Year O. Net working capital will not change after Year O until the last year of the project, at which time net working capital will be completely recovered. The fixed asset will have a salvage value (before-tax) of $499,800 in the last year of the project. Required: What is the NPV of the project? (Do not include the dollar sign ($). Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 1,234,567.89)) NPV $
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