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Garrison Communications is considering a project with an initial fixed asset cost of $ 1 . 7 5 million which will be depreciated using the

Garrison Communications is considering a project with an initial fixed asset cost of $1.75 million which will be depreciated using the double declining method over the 4-year life of the project. At the end of the project the equipment will be sold for an estimated $800,000. The project will not directly produce any sales but will reduce operating costs by $900,000 a year. The tax rate is 22 percent. The project will require $25,000 of inventory which will be recouped when the project ends. Should this project be implemented if the firm requires a 14 percent rate of return? Why or why not?

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