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MRT Corp., wants to start a production of smart globes. The owners made the research costing $30000. The project will take up 5 years. Marketing

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MRT Corp., wants to start a production of smart globes. The owners made the research costing $30000. The project will take up 5 years. Marketing research came up with the following results: revenue can reach $250 mio during following 5 years. To start the production the equipment should be bought for $100 mio. with installation costs of $30mio incurred. Useful life of this equipment will be 5 years with $10 mio residual value. Assume straight-line depreciation. The firm will face variable costs at 50% of Revenue. Fixed overheads of MRT Corp. are stable at $20 mio annually and won't change due to the launch of the project. $100 mio. should be invested in working capital at the beginning of the project and would be recouped at the end of the project. Income tax is 20%. The similar investments require 18% return. Evaluate the decision using the NPV approach with all the assumptions stated

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