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Name (40 points) 30. After paying a consultant $5,000 for a market analysis, a small computer supply company has decided to expand operations and add

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Name (40 points) 30. After paying a consultant $5,000 for a market analysis, a small computer supply company has decided to expand operations and add a new store near the DU campus. They are interested in buying an existing vacant store at a cost of $100,000. They will need to make $15,000 in renovations (improvements) and initially increase working capital by $7,000. The installed costs will be depreciated on a straight-line basis over five years. Net incremental before-tax cash flows (revenues less operating expenses) are expected to be $50,000 per year over the next five years. A return of the initial increase in working capital will occur at the end of the fifth year. Assume the store is sold at the end of five years for $70,000 and its net book value is zero. Assume a 30% tax rate. If the required rate of return is 10%, is this an appropriate project? Why? Perform a capital budgeting analysis to support your position

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