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Period 0 1 2 3 4 EBIT 35,000 45,000 60,000 75,000 The above table illustrates earnings before interest and taxes for a capital investment project.
Period | 0 | 1 | 2 | 3 | 4 |
EBIT | 35,000 | 45,000 | 60,000 | 75,000 |
The above table illustrates earnings before interest and taxes for a capital investment project. Additional information for this project: initial cost of the investment = $250,000 change in net working capital = $10,000 (and 50% of this is recoverable at end of the project) tax rate = 31.0% WACC = 15.0% depreciation = straight line over five years projected cash flow from salvage = $136,250 What is net incremental cash flow for Year 1?
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