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It is your job to evaluate a new project that would be added to an otherwise profitable firm. The project is a three-year project that

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It is your job to evaluate a new project that would be added to an otherwise profitable firm. The project is a three-year project that requires an initial investment in equipment of $120,000 and then requires an initial investment in working capital of $10,000 (at 1=0). You expect the project to produce sales revenue of $100,000 per year for three years. You estimate manufacturing costs at 50 percent of revenues. (Assume all revenues and costs occur at year-end [i.e., 1-1,1 -2, and : -3]). The equipment depreciates to zero using straight-line depreciation over three years. At the end of the project, the firm can sell the equipment for $10,000 and also recover the investment in net working capital. The firm spent $50,000 last year doing market survey. The corporate tax rate is 30 percent. Calculate the annual cash flows of the project for years 0-3

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