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Moonrise Inc is considering expanding its operations. The expansion will require new equipment costing $649,000 that would be depreciated on a straight-line basis to a
Moonrise Inc is considering expanding its operations. The expansion will require new equipment costing $649,000 that would be depreciated on a straight-line basis to a salvage value of $187,000 over the four-year life of the project. The project requires $38,000 initially for net working capital, all of which will be recouped at the end of the project. The projected operating cash flow is $155,864 a year for four years. What is the net present value of this project if the relevant discount rate is 14 percent and the tax rate is 35 percent? A. $ - 122,138 B. $ - 138,391 C. $ - 84,138 D. $ - 99,639 E. $ - 210,358
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