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Mundane Motors is planning the sale of new Prosaic sedans for the 2015 model year. An initial inventory investment of $6.5 m. is required. Projections
Mundane Motors is planning the sale of new Prosaic sedans for the 2015 model year. An initial inventory investment of $6.5 m. is required. Projections for the next four quarters are as follows. Ending receivables will be collected in cash at quarter 6. Ending inventory will be sold for cash at half its book value at quarter 5. Assume that Shrinkage and Bad Debt are zero. The OCC is 14.25% per year and the tax rate is 35%. a. Calculate the stream of tax payments associated with this project. b. Calculate the stream of new goods purchases associated with this project. c. Calculate the stream of cash inflows associated with this project. d. Calculate the net cash flow stream associated with this project. e. Calculate the NPV of this project
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