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Fundy Inc. is evaluating a project that requires a $350,000 investment In equipment, $250,000 In shipping and installation and a $175,000 investment in net working
Fundy Inc. is evaluating a project that requires a $350,000 investment In equipment, $250,000 In shipping and installation and a $175,000 investment in net working capital. Fundy uses straight-line depreciation. Assuming the project has a six year life-cycle and the fixed assets will have a salvage value of $0, what is the value of the terminal year cash flow at the end of the project (t = 6)? $175,000 $250,000 $600,000 $0 Fundy's project is expected to generate net cash flows of $3,500,000 per year for the first six years of the project's life. If the project has an indefinite life, what Is the terminal value of future cash flows as of Year 6? Assume that net cash flows are expected to grow at 2% per year indefinitely and the appropriate cost of capital for this project is 8%. $58,333,333 $65,000,000 $59,500,000 $43,750,000 $17,500,000
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