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juice manufacturer conducted a marketing study three years ago to determine the consumers preferences for different type of juices including organic juices. This study was

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juice manufacturer conducted a marketing study three years ago to determine the consumers preferences for different type of juices including organic juices. This study was very extensive and detrimental in their decision to start a new organic juice division today. It cost them $1,000,000 to this study perform The company is considering introducing organic juices. The company will add a new assembly line in order to produce the organic juices separate from their existing assembly line for regular non-organic juices The project has an anticipated life of 4 years. The new assembly line has a cost of $1,500,000. It will require $500,000 to customize it to the new specifications for organic juice production, and $100,000 for transportation and shipping to the company's plant The new machine falls into 5-years MACRS ca tegory (20%, 32%, 19.2%, 11.52%, 11.S2% and 5.76%). The organic juice production will require inventories to increase by $1,000,000 at time 0; in addition, accounts payables and accruals will increase by $450,000 and $150,000 respectively. The organic juice is expected to generate sales revenue of $700,000 million the first year. The revenue is expected to increase by $300,000 every year. Each year the operating costs (excluding depreciation) are expected to equal 50 percent of sales revenue. In order to do this expansion, the company will borrow $3 million. The annual interest expense on this borrowing S400,000. The organic juice is expected to decrease the company's existing non-organic juice sale by $350,000 per year before tax basis. The company can sell the new machine at the end of 4 years for $50,000 in the market. The company's cost of capital is 12 percent. The company's tax rate is 40 percent. What is cash flow 4 to be used in NPV calculations? 941,920

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