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Fox Pty Ltd (Fox) is a listed company on ASX and is aiming to invest $500,000 into a new product line. The residual value of
Fox Pty Ltd (Fox) is a listed company on ASX and is aiming to invest $500,000 into a new product line. The residual value of this investment at the end of 5 years would be $50,000, which is depreciated using Straight Line Method. This investment brings additional net operating income of $80,000 which would be increased by 7% each year till year 5. Also, for this investment, Fox is required to invest 3% of the new net operating income each year. Having tax rate of 30%, calculate: a) Investment Free Cash Flows for years 0 to 5?
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