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need help with net annual operating after tax cash flows and last year terminal cash flow thanks 7. The estimation of a project's net investment
need help with net annual operating after tax cash flows and last year terminal cash flow thanks
7. The estimation of a project's net investment and net annual cash flows Consider the case of Cambridge Equipment Co:: Cambridge Equipment Co. currently earns annual revenues of $300,000 and incurs total operating expenses (excluding depreciation and interest expense) of 40.00% of revenues. Its earnings are taxed at a rate of 40%. Today, its budgeting committee is evaluating the purchase of a new router. The router is expected to cost $75,000, plus $4,000 in freight and setup expenses, and will be depreciated using straight-line depreciation. It is expected that the router will have a useful life of six years and a salvage value equal to 25.00% of its purchase price of $75,000. It is expected that the router will be sold for its book value, such that no capital gain or loss will be realized. It is further expected that the router will cause a 20.00% increase in the firm's annual sales and total operating expenses (excluding depreclation and Interest expense). If the router is purchased, the firm will require an additional $10,000 in net working capital (NWC). Given this intormation, complete the following analysis Step by Step Solution
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