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Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.76 million. The fixed asset falls
Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.76 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $2,100,000 in annual sales, with costs of $791,000. The project requires an initial investment in net working capital of $320,000, and the fixed asset will have a market value of $220,000 at the end of the project. a. If the tax rate is 22 percent, what is the projects Year 1 net cash flow? Year 2? Year 3
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