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please show work, thanks! Green Inc. can buy an asset that costs $450,000. It has an expected economic life of 4 years. The asset will
please show work, thanks!
Green Inc. can buy an asset that costs $450,000. It has an expected economic life of 4 years. The asset will be depreciated using the straight-line method to zero. (Ignore the mid-year replacement rule, i.e. asset will be depreciated over 4 years.) The company expects to sell the asset for $90,000 at the end of 4 years. Sales are expected to be $520,000 per year and costs will be 50% of the sales. The firm will also need to invest $130,000 in net working capital at time 0. This working capital Investment will be recouped when the asset is sold. The appropriate discount rate is 12% and the corporate tax rate is 30%. What are the expected net cash flows in the final year, year 4 Step by Step Solution
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