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ONLY ENTER THE FINAL ANSWER (THE NPV OF THE PROJECT) IN THE FIELD BELOW. 1. Custom Gear, Inc. is considering a new project to expand
ONLY ENTER THE FINAL ANSWER (THE NPV OF THE PROJECT) IN THE FIELD BELOW. 1. Custom Gear, Inc. is considering a new project to expand its manufacturing facilities. The project requires an initial investment of $15 million today (the investment involves the purchase of equipment with a CCA rate of 25% and $9 million salvage value). The Accelerated Investment Incentive (A.I.I.) and declining balance depreciation apply. Management believes that the company will NOT have other assets in the same asset class when the equipment is sold in three years. Revenues (R) and expenses ( E ) from this project (before taxes and excluding depreciation) are shown in the table below. Not included in the expenses in the table below is an environmental impact report provided by a local consulting firm for a total cost of $60,000. The table also shows the typical net working capital requirements for Custom Gear as a percentage of expected sales revenue for the following year (the same percentages would apply to additional
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